The European Investment Bank (EIB) has issued a blockchain-based digital bond. The Swedish Krona-based Climate Awareness Bond is enabled by node operators to improve the environmental footprint of infrastructure.
A statement from the financial institution outlined the main characteristics of a ‘digital native green bond’ denominated in Swedish krona. The 1 billion krone bond will offer institutional investors a fixed interest rate of 3.638% over two years.
The Climate Awareness Bond is also promoted as the first blockchain-based bond registered on the Luxembourg Stock Exchange Securities Official List and displayed on the Luxembourg Green Exchange.
The bond will operate on So|bond, a recently launched blockchain-based digital bond platform. As reported, the platform enables the issuance, trading, and settlement of digital bonds by providing environmental incentives for its node administrators.
Proof of Climate awaReness is a protocol developed by So|bond that incentivizes nodes to reduce the environmental impact of their infrastructure. This is accomplished by compensating nodes based on a formula relating to their climatic impact, with lower impact ratings resulting in greater rewards.
French IT provider Finaxys developed the protocol, whereas So|bond is a joint project administered by Skandinaviska Enskilda Banken (SEB) and Credit Agricole CIB.
Ricardo Mourinho Felix, vice president of the EIB, stated that the first-ever green and SEK-denominated bond seeks to utilize blockchain technology to advance toward more sustainable financial systems.
“This Climate Awareness bond will run on a platform designed to minimise the environmental footprint of the IT infrastructure.”
Ben Powell, manager of sustainable DCM at SEB, added that perceptions of high energy consumption have restricted blockchain technology adoption in recent years. So|bond aims to reduce the environmental impact of financial infrastructure by employing a technology that has been traditionally criticized for its carbon footprint:
“The platform we have built aims to address this by introducing a disclosure of the environmental footprint of the operators of the network.“
Over the past three years, the EIB has investigated the use of blockchain-based platforms for digital bonds. In April 2021, ETH reached all-time highs due to rumors of an EIB-issued digital bond based on Ethereum.
In collaboration with Goldman Sachs and Société Générale Luxembourg, the institution subsequently resolved a 100 million euro ($103.7 million) digital bond on a private blockchain platform.
