21/05/24

SWITZERLAND: World Bank Issues Digital Bond in Switzerland on the Blockchain

As published on: fintechnews.ch, Tuesday 21 May, 2024. 

The World Bank priced the first CHF digital bond by an international issuer, which will settle using Swiss Franc wholesale Central Bank Digital Currency (wCBDC) provided by the Swiss National Bank (SNB).

This 7-year CHF 200 million digital bond, the largest World Bank CHF bond issuance since 2009, uses Distributed Ledger Technology (DLT) and advances the digitalization of capital markets while also supporting the financing of World Bank’s sustainable development activities.

The World Bank partnered with the SNB and SIX Digital Exchange (SDX) to further scale efforts in the use of DLT in capital markets. This partnership introduces the use of wCBDC by the SNB for initial settlement.

The coupon and redemption payments will be made using tokenized CHF on the SDX. The SDX connects to conventional settlement systems such as Euroclear and Clearstream, via SIX SIS, allowing investors to hold the digital bond through their traditional custodians. The transaction follows the World Bank’s recent digital issuance on Euroclear’s Digital Financial Market Infrastructure (D-FMI) and builds upon its partnerships with core market infrastructure providers to scale digitalization efforts.

The bond is listed on both SIX Digital Exchange and the traditional SIX Swiss Exchange. The securities are governed by Swiss law. The bond was placed mainly in Switzerland, with banks, bank treasuries and corporates representing the majority share of allocations at 60%, followed by asset managers, insurance companies and pension funds at 39%. The remainder was placed with central banks and official institutions.

“We are grateful for the opportunity to issue the first CHF digital bond as an international issuer. This achievement marks another significant step in the World Bank’s commitment to increasing capital markets’ efficiency through digitalization in partnership with central banks and central securities depositories. It builds on our previous accomplishments with bond-i and the issuance of digitally native notes last October,” said Jorge Familiar, Vice President and Treasurer of the World Bank.

“Being able to settle wholesale transactions in tokenized central bank money is a critical, foundational requirement for the adoption of a blockchain based capital markets infrastructure. Today, the World Bank takes the industry one step forward. SDX is truly delighted to have the World Bank’s first CHF-denominated digital issuance settle in wCBDC on our platform as part of the SNB’s groundbreaking initiative Project Helvetia. This is further testament of the World Bank’s pioneering innovation in the digital asset space,” said David Newns, Head SIX Digital Exchange.

Commerzbank was the sole lead manager and is also the paying and issuer agent for this transaction.

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Switzerland Digital Bond Blockchain World Bank

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