- Slovenia recently issued a €30 million sovereign digital bond with a four-month maturity and 3.65% interest.
- The Republic becomes the first in the EU to issue this kind of security instrument.
- The digital bond was settled using the EU’s wholesale central bank money.
Slovenia Announces Issuance of Sovereign Digital Bond
The Republic of Slovenia became the first nation in the European Union (EU) to issue a sovereign digital bond. The Slovenian Government announced on Thursday that it issued the bond through the European Central Bank’s (ECB) wholesale central bank money (CeBM).
The announcement didn’t specify the specific purpose of the digital bond. However, since it is merely a digital representation of a sovereign bond, Slovenia will likely use the debt security instrument to finance its operations, infrastructure, payment of old debt, interest on current debt, infrastructure, or government spending.
Features of Slovenia’s Sovereign Digital Bond
ECB’s CeBM operates under the EU’s settlement experimental program. The EU central bank tailored the digital token exclusively for financial institutions.
Slovenia’s sovereign digital bond was worth €30 million ($32.5 million). It came with a four-month maturity due on November 25 and a coupon of 3.65%. The government settled the security via Banque de France’s (BdF) interoperable and full distributed ledger technology (DLT) solution.
BdF serves as both the provider and operator of the Distributed Ledger for Securities Settlement System or “DL3S.” The platform is both a private and permissioned blockchain based on the Linux Foundation’s open-source Hyperledger Fabric.
Meanwhile, BNP Paribas acted simultaneously as the Global Coordinator, Sole Bookrunner, and DLT platform operator of Neobonds. The bank’s tokenization program leverages Daml.
Daml is Digital Asset’s unified network for sovereign applications. The system synchronizes, tokenizes, and mobilizes regulated financial assets and services through a privacy-first smart contract language, developer tools, and accelerators.
Long-Term Goal of Slovenia
According to the Slovenian Government, it aims to position itself as a pioneer in the infusion of innovative technologies in its central government debt management and financial market. The implementors of its latest project using wholesale tokenized central bank money consider the latest milestone as an “important stepping stone” toward greater transparency and efficiency.
The government stated that the project is “hardly material” in its current financial markets. It does not find a significant advantage for it in terms of value issued and/or traded. Nevertheless, it believes in the potential of DLT and its use cases to grow and further develop in the coming years.
