Lugano Issues CHF 100M Native Digital Bond

Leveraging blockchain technology, the bond integrates with conventional financial systems, reflecting Lugano’s commitment to innovation.

The issuance of a native digital bond by the Swiss City of Lugano builds on the achievements of its initial offering in early 2023.

Lugano’s native digital bond, which is valued at CHF 100 million ($114 million), will be settled using the experimental central bank digital currency (CBDC) of Switzerland.

Swiss authorities have been conducting experiments with novel applications of CBDC technology as a component of Project Helvetia III, a restricted pilot initiative for CBDC.

The bond issuance is similar to the one in 2023; the municipality will utilize SIX Digital Exchange-based blockchain technology.

Lugano’s new digital bond will be deposited at the Central Securities Depositories of the SDX as part of an initiative to integrate Web3 offeringsFordeFi Raises $10M for Secure Web3 Wallet Platform with conventional financial systems.

Michele Foletti, the mayor of Lugano, stated, “It materializes the city’s goal of becoming a cutting-edge metropolis and to support and promote technological innovation, development, and research, as well as digital transformation.”

Lugano’s most recent bond offering, comparable to the 2023 iteration, is led by J. Safra Sarasin, Zurcher Kantonalbank, and Basler Kantonalbank.

High interest levels were affirmed by participating banks in the digital bond market, with Zurcher Kantonalbank purportedly concluding its order book in less than twenty minutes.

Executives of the bank have ratified nine distinct proposals from asset managers, pension funds, banks, and insurers, all vying for a share of the action.

Lugano’s Role in Shaping the Future of CBDCs

The Swiss National Bank (SNB) authorized the settlement of digital bonds designed with wholesale CBDCs by the cantons of Zurich and Basel in late 2023.

“The settlement of the first securities transactions in wCBDC in a developed economy on regulated blockchain-based infrastructure in a production environment represents a major milestone for the entire industry on the path to adoption of a tokenized, DLT-based financial markets infrastructure,” said David Newns, Head of SIX Digital Exchange.

“This is the most ambitious wCBDC project in the history of capital markets.”

Recent months have witnessed an increase in international interest in tokenization, fueled by a spate of digital bond issuances. After the initial digital bond issuance went well, the Hong Kong Monetary Authority (HKMA) proceeded with the issuance of a subsequent iteration, which had a value of $756 million.

For prospective CBDCs to remain competitive in a dynamic environment, banking regulators are directing the discourse toward tokenization properties.

Banque de France Deputy Governor Denis Beau stated, “If we do not adapt central bank money to this evolving landscape,” that is, if central bank money cannot be used to resolve tokenized transactions, industry participants may turn to alternative settlement assets like stablecoins.