Italy’s Leading Banks Issue €25M Digital Bond on Polygon Network

Italy has achieved a remarkable milestone in financial technology with the issuance of a €25 million digital bond on the Polygon blockchain network.

This groundbreaking transaction, executed on Thursday, represents a key moment in Italy’s push towards integrating blockchain technology into its financial sector.

The bond, which has a four-month maturity period and a fixed coupon rate of 3.633% annually, was exclusively underwritten by Intesa Sanpaolo, Italy’s largest bank with assets exceeding $1 trillion. This issuance is a landmark event as it is the first of its kind under Italy’s new regulatory framework for digital assets.

The collaboration between Cassa Depositi e Prestiti SpA (CDP) and Intesa Sanpaolo highlights Italy’s commitment to embracing technological advancements in finance. This transaction also utilized the “TIPS Hash Link” tool from the Bank of Italy, which facilitated a seamless settlement in euros on the day of issuance. This demonstrates the efficiency of blockchain technology compared to traditional financial systems.

This initiative aligns with broader European efforts, particularly those of the European Central Bank (ECB), which is exploring blockchain’s potential to enhance wholesale fiat money settlements. By conducting trials like this, the ECB aims to assess blockchain’s impact on transaction speed, transparency, and cost-effectiveness.

Niccolò Bardoscia, head of digital assets trading and investments at Intesa Sanpaolo, expressed enthusiasm about the transaction’s implications. He views blockchain and tokenization as key drivers of efficiency and automation in financial markets, predicting that these technologies will revolutionize various asset classes in the coming years.

Italy’s successful digital bond issuance reflects a global trend where major banks and asset managers are increasingly integrating blockchain technology into traditional finance. Tokenizing assets such as bonds and credits offers numerous benefits, including faster settlement times and enhanced transaction security.

Fabio Massoli, CDP’s Director of Administration, Finance, Control, and Sustainability, highlighted the initiative’s potential to promote a new market ecosystem and provide value to both issuers and investors. He emphasized that this move opens up new opportunities, particularly for SMEs.

Massimo Mocio, Deputy Chief and Head of Global Banking & Markets at Intesa Sanpaolo, also underscored the importance of the ECB’s trial program in showcasing the bank’s digital capabilities and its role in advancing financial markets through innovative technologies.