According to CoinDesk, KfW, Germany's largest development bank, has partnered with Boerse Stuttgart Digital (BSD) to prepare for its upcoming blockchain-based digital bond offering. This initiative is set to take place under the German Electronic Securities Act (eWpG) in the coming weeks. BSD will manage the crypto wallets and secure the private keys during the issuance and redemption processes.

The bond issuance is part of the European Central Bank's (ECB) trials to settle blockchain-based transactions using central bank money. Gaetano Panno, head of transaction management at KfW, emphasized the bank's commitment to digitalization in the issuing and settlement process. He stated that the use of new technologies in the ECB trials allows KfW to process 'delivery vs. payment' transactions, supporting their digital learning journey.

This move by KfW is a significant example of traditional financial institutions exploring blockchain technology to tokenize real-world assets (RWA) such as bonds, credit, and funds. Tokenization offers operational benefits, including faster and more transparent transaction settlements, lower costs, and increased efficiency and transparency.

Last month, Italy's state-owned development bank Cassa Depositi e Prestiti SpA (CDP) and lender Intesa Sanpaolo completed a blockchain-based bond issuance as part of an ECB trial. KfW's upcoming digital bond issuance will follow its first tokenized security offering, a 100 million euro ($108 million) digital bond issued in July using the Polygon network.