German state bank prepares to issue tokenized bonds with Boerse Stuttgart Digital as part of ECB trial
Date: 2024-08-13 Author: Gabriel Deangelo Categories: BUSINESS
KfW, the largest state-owned bank in Germany, has announced its partnership with Boerse Stuttgart Digital (BSD), which will act as the infrastructure provider for the upcoming issuance of tokenized bonds. The issuance will take place in the coming weeks in accordance with the German Electronic Securities Act (eWpG). BSD will ensure the security of cryptocurrency wallets and the storage of private keys during both the issuance and redemption of the bonds.
The upcoming event will be part of a trial by the European Central Bank (ECB) aimed at practicing the settlement of transactions on the blockchain using central bank money.
“As one of the largest bond issuers in the world, we are actively promoting the digitalization of issuance and settlement processes,” said Gaetano Pano, Head of Transaction Management at KfW. “Using new technologies as part of the ECB trial allows us to technically implement delivery versus payment transactions, which supports our digital learning process.”
The KfW initiative is the latest example of how traditional financial institutions are exploring the use of blockchain to tokenize real assets such as bonds, loans and funds. The tokenization of real assets (RWA) promises significant operational benefits, including faster settlements, lower costs and greater transparency.
It is worth noting that a month ago, Italian state-owned bank Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo completed the issuance of bonds on the blockchain as part of a similar trial at the ECB.
KfW's upcoming digital bond issue will follow its first tokenized issue, worth €100 million ($108 million), which was conducted in July using the Polygon (MATIC) network.
