Slovenia has made history as the first European Union member to issue a sovereign digital bond, with a 30 million-euro ($32.5 million) note settled on-chain through the Bank of France’s tokenized cash system. This milestone is part of the European Central Bank’s (ECB) money settlement experimentation program, coordinated by BNP Paribas.
The four-month notes, which carry a coupon of 3.65%, are set to mature on November 25. The settlement took place in wholesale central bank digital currency (CBDC) on Thursday, according to the Slovenian government. Unlike retail CBDCs, which are designed for consumer use, wholesale CBDCs are digital tokens intended for financial institutions.
In May, the ECB completed its first test of wholesale CBDC settlements and announced plans for additional trials and experiments. The initial experiment, conducted by Austria’s central bank, focused on the tokenization and simulated delivery-versus-payment settlement of government bonds in a secondary market transaction against central bank money.
“These initial transactions and experiments with wholesale tokenized central bank money represent an important steppingstone to greater transparency and efficiency of financial markets with wider technology adoption,” the Slovenian government stated. “While the current value issued and traded is modest, we anticipate significant growth in the importance of distributed ledger technology in the coming years.”
BNP Paribas served as the global coordinator and sole bookrunner for the bond issuance. The bank also operated the distributed ledger technology platform, Neobonds, which was built using Digital Asset’s Daml and the Canton blockchain.
This groundbreaking move by Slovenia highlights the potential for digital financial instruments to enhance market transparency and efficiency, setting a precedent for other EU nations to follow.
