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Siemens Issues $330M Digital Bond on Private Blockchain with Major German Banks Including Deutsche Bank

Sep 4, 2024
  • The company used the permissioned, private blockchain of fintech firm SWIAT and the Bundesbank’s trigger solution for settlement.
  • The issuance was part of a European Central Bank’s trial to settle central bank money on blockchains.

As an analyst with years of experience in the financial sector and a keen interest in emerging technologies, I find Siemens AG’s latest digital bond issuance to be a significant step forward in the integration of blockchain technology in traditional finance. My previous encounters with the industry have often involved lengthy settlement periods, but Siemens’ automation within a few minutes is truly a game-changer.

On Wednesday, the renowned German industrial company, Siemens AG, announced that they had launched a 300 million euro ($330 million) digital bond using blockchain technology, as part of an experiment conducted by the European Central Bank (ECB)

As an analyst, I can state that I observed a collective investment by major German financial institutions, including BayernLB, DekaBank, DZ BANK, Helaba, and Landesbank Baden-Württemberg (LBBW), in the bond issuance. Deutsche Bank was instrumental in facilitating the settlement process for this transaction

In a recent blog post, Siemens mentioned they are leveraging their past knowledge from a 60 million euro bond issue on the Polygon network (MATIC) last year, where it took two business days to finalize the deal

“Within just a few minutes, we saw the incredible capabilities of this new technology, solidifying our commitment to staying at the forefront of digital advancement. This was emphasized by Peter Rathgeb, Siemens’ Corporate Treasurer,” is one possible way of paraphrasing the original statement

The latest transaction was settled via SWIAT, a private permissioned blockchain, the company said.

Siemens’ decision to issue bonds on a blockchain platform is another instance of conventional financial entities seeking innovative methods to apply traditional investments like bonds, credit, and funds using blockchain technology. This practice, often referred to as the tokenization of real-world assets (RWA), offers potential advantages such as expedited and transparent settlements for transactions, reduced costs, and increased efficiency and transparency

In the past month, CoinDesk announced that KfW, Germany’s largest development bank, collaborated with Boerse Stuttgart Digital (BSD) to prepare for the release of a digital bond. Additionally, Italy’s state-owned Cassa Depositi e Prestiti SpA (CDP) and lender Intesa Sanpaolo completed a bond issuance on Polygon in July. These transactions were all part of trials conducted by the European Central Bank (ECB)

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2024-09-05 00:44