Lugano still ahead of Swiss CBDC digital bonds with CHF 100 million

The city of Lugano continues its innovations in digital finance with a second bond issue settled in Swiss CBDC (Central Bank Digital Currency). A successful operation that confirms the popularity of these new assets.

A second 100% digital bond issue

This month, the municipality of Lugano issued digital bonds for 100 million Swiss francs ($114 million). These 10-year securities with an interest rate of 1.415% are listed simultaneously on the digital trading platform SDX and the main exchange SIX.

The particularity of this transaction lies in the method of settlement, which took place in Central Bank Digital Currency (CBDC) as part of the Helvetia pilot project of the Swiss National Bank. This project allows certain banks to use the wholesale CBDC until June 2024.

These are the second issue of this type by Lugano 100 million digital bond, also in February 2023. On both occasions, demand far outstripped supply, demonstrating investors’ appetite for these new-generation financial securities.

Confirmed investor interest in Swiss CBDCs

With this second transaction, Lugano has established itself as a leading financial center for the issuance of digital native bonds. Other local authorities such as Zurich and Basel have already followed suit, also using CBDCs for settlement.

For the Mayor of Lugano Michele Foletti, this innovation reflects the city’s desire to position itself as “a model of digital transformation and technological development”. Lugano aims to become a global showcase for decentralized finance.

The pace of digital bond issuance is already accelerating in Switzerland, but also internationally. Recently, Hong Kong launched its first green bond entirely digital, 750 million.

Since 2022, Lugano has in fact initiated a vast plan to promote cryptos on its territory, including the possibility for its citizens to pay their taxes in bitcoin (BTC) or Tether (USDT). The city also hosts numerous events dedicated to digital financial innovations.

With this positioning, Lugano seeks to attract entrepreneurs, investors and talent in the field of blockchain, cryptos and decentralized finance. A risky gamble, but one that’s paying off, judging by the success of its recent digital bond fundraisings.

Conclusion

With the support of the powerful Zurich Cantonal Bank, Lugano has established itself as a world leader in the transition to digital assets and currencies. Its innovative strategy is setting an example that could inspire other cities and regions in Europe and around the world. The potential of this finance 2.0 applied to public authorities and citizens remains largely unexplored.. Lugano is setting the pace this time with the Swiss CBDC – could this be just the beginning?