As a seasoned researcher with a keen interest in the intersection of finance and technology, I am consistently intrigued by the strides being made in blockchain adoption, particularly in cities like Lugano. Having followed Lugano’s journey from a cryptocurrency-friendly city to a pioneer in digital bond issuance, I find myself impressed by their foresight and commitment to innovation.
As an analyst, I’m excited to report that I’ve been following the innovative strides made by the city of Lugano, Switzerland. Recently, they’ve taken another significant step forward by issuing their third bond, this time worth approximately $139 million. What sets this bond apart is its dual listing – it can be traded both on digital exchanges, leveraging blockchain technology, and traditional exchanges as well. This move underscores Lugano’s commitment to embracing modern financial solutions while maintaining a strong presence in the traditional market.
As per a recent Global Government Fintech report dated November 7th, the city of Lugano has emitted three digital bonds in the past two years, amounting to a combined value of 320 million Swiss Francs ($365 million). These digital bonds are issued utilizing distributed-ledger technology and can be found listed on both the SIX Digital Exchange and the SIX Swiss Exchange, which is Switzerland’s primary stock exchange.
On November 4, a new blockchain-based bond valued at 120 million Swiss Francs was revealed by the city. This bond is part of the Swiss National Bank’s experimental program for central bank digital currency (CBDC) called Project Helvetia. The settlement for this bond has been set for November 25, which will take place using the CBDC wholesale platform.
In early January 2023, Lugano introduced its inaugural blockchain-based bond. This unique financial instrument, referred to as a “digitally native” bond, carries a maturity of six years and holds a value of 100 million Swiss Francs.
On February 2024, a second blockchain-based bond valued at 100 million Swiss Francs was launched as a joint effort between Zurich Cantonal Bank and Basel Cantonal Bank. This bond has a maturity of ten years and offers a yield of 1.415%.
As a crypto investor, I can’t help but share my perspective on the topic of digital bonds. Recently, Paolo Bortolin, Lugano’s deputy chief financial officer, expressed confusion as to why other issuers might be hesitant to issue digital bonds via blockchain. In my own experience, I find the process remarkably smooth and, in essence, not all that different from traditional bond issuance.
Following the initial release, it became clear that this technology could shape the future of finance. As a result, we pledged to carry on with digital bond issues through SDX,” he explained.
He mentioned that currently, the use of blockchain technology by the public sector is relatively limited. However, he anticipates that Lugano’s persistent initiative to release digital bonds might encourage more extensive usage across a broader spectrum.
Bortolin stated that our recent bond release clearly showed investor interest in digital bonds, as it was fully subscribed within an hour. I wholeheartedly recommend other issuers to follow suit and seize the opportunity to be part of the digital evolution of finance.
Besides Lugano, the city of St. Gallen is among other entities that have also offered bonds on the SDX, including the Union Bank of Switzerland and the World Bank.
As a passionate crypto investor, I can’t help but be captivated by the city of Lugano, renowned for its embrace of digital currencies. Its vision is to redefine its financial landscape, turning it into a thriving epicenter for Bitcoin and blockchain ingenuity.
By December 2023, the city of Lugano will start accepting Bitcoin (Bitcoin) as a means of payment for taxes. Additionally, they have introduced a Bitcoin-linked stablecoin named LUGA, which can be used at more than 350 businesses spread throughout the city.
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2024-11-07 20:20