- BSD will provide crypto wallets and safeguard the security of private keys.
- Digital bond issuance underscores ECB trials for blockchain-based settlements.
State-owned and Germany’s largest development bank, KfW, is preparing for its anticipated blockchain-based digital bond offering. The bank teamed up with Boerse Stuttgart Digital (BSD) as an infrastructure provider partner ahead of the bond issuance in the coming weeks.
In a Monday announcement, KfW head of transaction management Gaetano Panno said:
“As one of the world’s largest and most active bond issuers, we are actively driving digitalization initiatives in the issuing and settlement process.”
BSD is expected to oversee the crypto wallets and secure the private keys during the digital bond’s issuance and redemption. KfW will issue the bonds under the German Electronic Securities Act (eWpG).
See Related: Beyond the Rate Cut: Challenges For The ECB’s Monetary Policy
Digital Bond Part of ECB’s Blockchain Settlement Trials
KfW’s digital bond offering is part of the European Central Bank’s trials of blockchain-based transaction settlement against central bank money. It follows the lender’s first tokenized security offering, which totaled 100 million euros ($108 million) in July.
Last month, Italian state-owned development bank Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo participated in similar bond issuance trials. In anticipation of EU-wide tests of blockchain-based settlements of financial instruments, BSD applied as a stock exchange operator at the end of June, also providing wallets and private key security.