HSBC, a global bank, announced on Wednesday 20 November 2024, the successful completion of the European Investment Bank’s first blockchain-based digital bond issuance under the Eurosystem’s exploratory initiative for wholesale central bank money settlement, coordinated by the Luxembourg Central Bank (BCL). The €100m bond, launched via the HSBC Orion digital assets platform under Luxembourg law, was settled using wholesale central bank digital currency (wCBDC) on the Banque de France’s distributed ledger technology (DL3S) platform. The transaction highlighted the interoperability between the HSBC Orion and DL3S systems, HSBC said in its announcement.

The bond issuance allowed global investors to pay in euros, while the EIB received the proceeds in wCBDC through Banque de France’s exploratory cash tokens. The digital bond is accessible to investors in both primary and secondary markets via custody accounts managed by BNP Paribas, HSBC or JP Morgan. HSBC acted as the lead bookrunner for the transaction.

Cyril Rousseau, director general of finance at the EIB, stated that the blockchain-based bond represented a significant advancement in modernising capital markets and integrating innovative technologies into finance. Rousseau highlighted the collaboration between the EIB and the Eurosystem, asserting that the use of blockchain technology enhanced transparency, security and efficiency in financial operations. He also noted the bond’s alignment with the EIB’s broader mission to boost Europe’s productivity and competitiveness while advancing the capital markets union.

Emmanuelle Assouan, director general of financial stability and operations at Banque de France, reaffirmed the institution’s commitment to tokenisation initiatives. She emphasised the DL3S platform’s role in facilitating the issuance and the benefits of using wholesale CBDC for atomic settlement. Assouan pointed out that the collaboration underscored the advantages of interoperability solutions in delivering efficient and secure transactions.

John O’Neill, group head of digital assets and currencies at HSBC, remarked that the digital bond issuance was a critical milestone in the exploration of distributed ledger technology (DLT) and digital assets in the European financial ecosystem. He highlighted the benefits of increased transaction speed, reduced risks, and adherence to strict regulatory standards achieved through the integration of HSBC Orion and Banque de France’s DL3S platform.

Emanuele Vignoli, CEO of HSBC Luxembourg, noted the significance of the EIB’s engagement with HSBC for this digital bond issuance, coming a year after the launch of HSBC Orion. He described the operation as a testament to the sophistication of both the European and Luxembourg financial ecosystems.

Updated 21 November at 12:29pm to reflect the participation of the Luxembourg Central Bank (BCL), which was not cited in the UK version of HSBC’s press release