Slovenia has issued a sovereign digital on-chain bond worth $32.5 million (30 million euros), marking the first such issuance by a European Union country. The bond, issued on July 25, is part of an experimental project with the European Central Bank’s (ECB) wholesale central bank money (CeBM) program.
The bond settlement was executed using a wholesale central bank digital currency (CBDC), a digital token designed for use by financial institutions rather than consumers. BNP Paribas coordinated the bond, which was settled through the Bank of France’s tokenized cash solution.
The bond will attract an interest rate of 3.65% and is set to mature on November 25. This issuance underscores Slovenia’s growing commitment to cryptocurrency and digital financial instruments. The Slovenian government stated, “The Republic is committed to pioneering the use of new technologies in its central government debt management, as well as in its financial market in general.”
Slovenia, though one of Europe’s smaller nations with a population of 2.1 million, has become a significant player in attracting crypto investors and companies. Its capital, Ljubljana, was named the most crypto-friendly city in 2022. The country does not charge VAT or capital gains tax on digital assets, enhancing its appeal.
Research firm CoinCub ranks Slovenia 16th in terms of crypto-friendly regulation, taxation, talent, ecosystem, and finance factors, with Switzerland topping the list, followed by Singapore, the United Arab Emirates (UAE), and the US.
The ECB conducted its first test of wholesale CBDC settlement in May, promising more trials and experiments. The initial experiment, carried out by the Central Bank of Austria, involved tokenization and simulated delivery-versus-payment settlement of government bonds in secondary market transactions against central bank money.
The Slovenian government views this bond issuance as a significant step towards enhancing transparency and efficiency in financial markets. “These initial transactions and experiments with wholesale tokenized central bank money represent an important steppingstone to greater transparency and efficiency of financial markets with wider technology adoption,” the government said.