Italy’s state-owned development bank Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo, the largest lender in the country with over $1 trillion of assets, recently made history by completing a digital bond issuance using blockchain technology. This groundbreaking transaction, worth €25 million and with a four-month maturity, took place on the Ethereum-based Polygon (MATIC) network.
What makes this issuance particularly significant is that it is the first of its kind under Italy’s new digital asset regulations. These regulations, part of the country’s “FinTech” decree-law, govern the issuance and circulation of digital versions of certain financial instruments. The bond issuance was carried out with the support of Intesa Sanpaolo, acting as the underwriter and sole investor.
One key aspect of this transaction is the use of the Bank of Italy’s “TIPS Hash Link” tool for settling the cash flow in euros on the same day (T+0). This tool enables interoperability between blockchain networks and traditional payment systems, showcasing the potential for seamless integration of new and existing financial infrastructure.
The initiative also aligns with the European Central Bank’s (ECB) efforts to explore blockchain technology for wholesale fiat money settlement. By participating in this trial, CDP and Intesa Sanpaolo are not only pioneering digital bond issuance in Italy but also contributing to broader discussions on the future of finance.
According to Niccolò Bardoscia, head of digital assets trading and investments at Intesa Sanpaolo, public blockchains offer significant advantages for financial institutions in terms of speed and security. He believes that tokenization, the process of representing real-world assets as digital tokens on a blockchain, will revolutionize financial markets by enhancing efficiency and automation.
As global banks and asset managers continue to embrace blockchain technology, we can expect to see more traditional financial instruments being tokenized. This trend, known as the tokenization of real-world assets, aims to streamline transaction settlements, reduce costs, and improve overall efficiency in the financial industry.
In conclusion, the successful issuance of digital bonds by CDP and Intesa Sanpaolo marks a significant milestone in Italy’s journey towards embracing blockchain technology in finance. As the industry continues to evolve, we can anticipate further developments in tokenization and digital asset management, shaping the future of financial markets worldwide.