German government-owned bank KfW has issued its second bearer digital bond, following the €100m first issuance last month. The latest €50m bond was settled using the German Bundesbank’s Trigger Solution, in which a smart contract triggers a payment in central bank money by linking to the TARGET2 RTGS system. Hence, this was a delivery versus payment (DvP) transaction.
The pilot issuance was part of the European Central Bank’s (ECB’s) wholesale DLT settlement trials using central bank money. The tests have attracted participation from almost 60 institutions. Apart from the Trigger Solution, other settlement options include the Banque de France’s CBDC and the Bank of Italy’s TIPS-Hashlink solution.
In order to perform the entire life cycle of the security as part of the pilot, the redemption will take place on 28 November before the ECB’s trials end.
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