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German State Bank Ventures into Blockchain with Maiden Digital Bond

Germany’s Kreditanstalt fuer Wiederaufbau (KfW), a state-owned bank, is making waves in the financial sector by launching its inaugural digital bond, heralding a new era of investment opportunities.

In a move signaling the embrace of blockchain technology within Germany’s traditional financial institutions, KfW is poised to introduce its first-ever blockchain-based digital bonds, according to a report by Bloomberg.

Tim Armbruster, Treasurer of KfW, expressed enthusiasm for the initiative, stating, “We are taking the next significant step with the issuance of a blockchain-based bond, aiming to attract a wide range of investors.”

Anticipating benefits in efficiency and scalability, Armbruster added, “We believe that digitalization will be advantageous.”

Preceding the bond’s launch, KfW intends to engage in discussions with European institutional investors over several weeks. Union Investment, affiliated with the DZ Bank Group, is reported to be a key investor.

Despite the innovative approach, KfW plans to retain traditional payment processes for the bond, with the transaction expected to be finalized in the summer months. The choice between utilizing public blockchain networks or developing a private solution remains unclear.

Joint bookrunners for the venture include DZ Bank, Deutsche Bank, LBBW, and Bankhaus Metzler, while German fintech company Cashlink Technologies will act as the crypto securities registrar. The bond, projected to mature in December 2025, will have a minimum size of €100 million ($108 million), as disclosed by sources familiar with the matter.

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