KfW bank issues digital bond using Trigger Solution [Video]

German state-owned investment and development bank KfW has issued its second bearer digital bond, following the €100 million ($110 million) first issuance in August. The latest €50 million ($55 million) bond tested the monetary processing of the issue of a blockchain-based digital bearer bond using Deutsche Bundesbank’s (NASDAQ: DB) Trigger Solution, which links market distributed ledger technology (DLT) platforms to the Eurosystem’s traditional payment system.

Specifically, the issuance method used a blockchain-based smart contract to trigger a payment in central bank money by linking to the TARGET2 real-time gross settlement (RTGS) system, owned and operated by the Eurosystem.

For processing in central bank money, it used DLT and smart contracts, enabling the automated exchange of securities and payment amounts, also known as a delivery versus payment (DvP) transaction. A DvP transaction is a securities industry settlement method that guarantees the transfer of securities after payment has been made.

The pilot issuance was …