Blockchain Technology Fuels European Investment Bank's Climate Awareness Bond

The European Investment Bank (EIB) has launched a digital bond leveraging blockchain technology. The bond, underpinned by eco-friendly node infrastructure, is part of the bank's proactive response to climate change concerns.

In its official announcement, the EIB highlighted the distinctiveness of the "digital native green bond" denominated in the Swedish krona. With an investment threshold of one billion krona, the bond promises a fixed return rate of 3.638% over two years to institutional investors.

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This Climate Awareness Bond took a spot in history as the first blockchain-based bond listed on the Luxembourg Stock Exchange Securities Official List and exhibited on the Luxembourg Green Exchange.

The bond's operations are based on the newly inaugurated sustainable blockchain digital bond platform, So|bond. The platform promotes the issuance, trade, and settlement of digital bonds, all while providing ecological incentives to its node operators.

The protocol is a creation of the French-based IT firm, Finaxys. The So|bond platform, on the other hand, is a joint venture led by Skandinaviska Enskilda Banken (SEB) and Credit Agricole.

The ground-breaking "Proof of Climate awaReness" protocol on So|bond encourages nodes to mitigate their infrastructure's environmental footprint. This is achieved by compensating nodes based on a formula tied to their climate impact, where lower impact ratings earn higher rewards.

Ricardo Mourinho Felix, EIB Vice President, revealed that the krona-denominated bond aims to utilize blockchain technology for the development of more sustainable financial structures:

This Climate Awareness bond will run on a platform designed to minimise the environmental footprint of the IT infrastructure.

Echoing the sentiment, Ben Powell, SEB's Head of Sustainable DCM, acknowledged the environmental impact of financial infrastructure. He pointed out that the platform aims to counter the criticism of blockchain technology 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.

This initiative underscores the growing influence of blockchain technology in transforming financial systems, driving them toward a more sustainable future.

In other news, the German banking giant Deutsche Bank filed for a digital asset custody license with the Federal Financial Supervisory Authority (BaFin).