KfW and DZ BANK have completed a digital bond issuance under the German Electronic Securities Act (eWpG), mapping the full lifecycle of the transaction on blockchain infrastructure.
The transaction, executed on the public Polygon blockchain, used a Smart Bond Contract to coordinate issuance, data sharing and settlement, with the Deutsche Bundesbank’s trigger solution enabling integration with central bank payment systems.
“This transaction marks a genuine innovation in the financial market,” said Matthias Bergner, head of Treasury at DZ BANK.
“Together with our offerings in the field of digital assets, it underscores our leading role in the German banking sector within the entire digital securities universe.”
Contrasting earlier tokenisation pilots, the process removed the need for a central securities depository, with participants contributing data directly to a shared ledger.
While a traditional bond issuance typically takes five days, the pilot transaction using the SBC concept took about one hour, according to DZ Bank.
KfW Treasurer Tim Armbruster said: “We were pleased to participate in this project, as this transaction represents another milestone on our learning journey towards Europe’s digital sovereignty.”
“To keep the German and European financial markets competitive, we need scalable digital products, and as a promotional bank, we are happy to contribute to their development and testing.”
