The Bank of Greece has carried out a simulated issuance of a sovereign digital bond on a distributed-ledger platform.
The move is the latest example of experimentation among state authorities across the globe in ‘blockchain bonds’, with the UK Government having recently taken a significant step towards its first digital bond issuance.
The European Union (EU) member state central bank’s blockchain bond explorations – dubbed ‘Project Sovereign’ – have aimed to ‘deepen understanding of distributed-ledger technology (DLT) and its applicability to sovereign debt instruments through hands-on simulations in a controlled environment’, according to a 20-page report published by a German fintech company involved in the experimentation.
The central bank acted as the issuer on behalf of the government, creating the digital bond and issuing it to project partners in a simulation of a ‘real-world’ digital bond issuance, the report explains (simulated means that no legally binding securities were issued and no real capital was at risk). The central bank also acted as central securities depository (CSD) and registrar.
Project Sovereign has enabled Bank of Greece and project partners to ‘gain hands‑on experience with DLT and its application to sovereign securities,’ the report summarises. It expanded the scope of an earlier (first) phase of experimentation by involving multiple market participants, two interoperable blockchain environments and a ‘full evaluation’ of the digital asset lifecycle, covering secondary market transactions, coupon payments and redemption.
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Eurosystem inspiration
The report has been compiled by SWIAT, whose digital assets software enabled the tokenisation – in the form of simulated EUR currency tokens (Greece is a member of the 21-strong eurozone) – and secure transfer of digital bonds on the blockchain.
It explains that this latest phase of Project Sovereign, which began in September 2025, assessed the ‘interoperability between securities and payments environments’, including the simulation of a wholesale payment solution, ‘based on the logic followed during Eurosystem exploratory work that took place in 2024.’
Between May and November 2024, the Eurosystem (which comprises the European Central Bank and the national central banks of all eurozone countries) tested the settlement of DLT-based transactions in central bank money via three interoperability solutions. This initiative – which has effectively evolved into the ‘Pontes’ project – brought together 64 participants, including central banks, financial market participants and DLT platform operators, and involved more than 50 trials and experiments.
‘To support realistic DvP [Delivery Versus Payment – settlement mechanism that ensures the bond transfer and corresponding payment occur simultaneously], SWIAT set up two dedicated test environments – one for the asset delivery and one for payment delivery,’ the report explains, mentioning use of a ‘SWIAT Blockchain Sandbox’ (a sandbox is a secure, isolated virtual test space).
Activity tested ‘target operating models’ (TOMs) built in the first stage of the project; further explored business and technical implications; ‘strengthened internal expertise’ in DLT-based bond management and tokenisation; and gathered ‘market feedback’ from project partners.
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Seven banks involved
A registered bond was selected, which the report describes as ‘closely reflecting the characteristics of Greek Government bonds issued in a traditional (non‑DLT) format’ (registered bonds link ownership directly to recorded information, unlike bearer bonds, where possession of a physical certificate determines ownership).
‘This model was chosen to reflect a realistic future scenario, as no additional viable DLT‑based bond use cases have currently been identified for the Greek Government,’ the report states.
Five Germany-headquartered banks – Berliner Volksbank, DekaBank, Eurobank, KfW (Kreditanstalt für Wiederaufbau) and LBBW (Landesbank Baden-Württemberg) – as well as NBG (National Bank of Greece) and Piraeus Bank (headquartered in Athens) invested in the bond.
Secondary market transactions were assumed to be executed six months post-issuance (rather than spanning multiple calendar years) and settlement amounts were calculated based on nominal amounts plus accrued interest on an annual coupon rate of 3.32%. Market price changes beyond accrued interest were not modelled.
Coupon payments were assumed to be made after one year, while at maturity – assumed two years after issuance – bondholders were repaid at par together with the final coupon.
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‘Further analysis’ needed on legal aspects
Bank of Greece is yet to confirm next steps.
But the report states future phases could involve improvements in areas including ‘user experience’ and automation of processes for ‘scaled use’. Focus also needed on regulatory alignment.
‘While the project TOM complies with German law and the EU Pilot Regime [a regulatory sandbox-style framework, in application since 23 March 2023, allowing market infrastructures to test DLT for trading and settling tokenised financial instruments], further analysis is required to assess its alignment with Greek law and any necessary adaptations for other jurisdictions,’ the report explains.
Project Sovereign does, however, align with the ECB’s decision (announced on 27 January) to accept marketable assets issued in central securities depositories (CSDs) using DLT-based services as eligible collateral for Eurosystem credit operations as of 30 March 2026 – an illustration of blockchain’s growing role in capital markets.
SWIAT, which was founded in 2022, has to date facilitated multiple digital securities issuances with a total transaction volume of more than €700 million (about £611m/$826m). Most notably, the company facilitated a €300 million blockchain bond issuance by Germany-headquartered Siemens, the industrial automation giant, in September 2024.
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‘Deepened earlier insights’
“Building on the strong cooperation and positive outcomes of the previous project, Project Sovereign extends both scope and ambition,” said Bank of Greece deputy governor Theodore Pelagidis.
“Acting as CSD and registrar, we further validated how traditionally separate capital‑market roles can be executed coherently in a blockchain‑based environment,” he continued. “Operating end‑to‑end across the sovereign bond lifecycle deepened earlier insights and demonstrated the potential of DLT to enhance efficiency, transparency, and operational resilience within regulated infrastructure. The sandbox environment supported close alignment with central bank and Eurosystem principles while strengthening European‑level collaboration, contributing to the path toward scalable, production‑ready sovereign issuance models and Europe’s digital capital‑market sovereignty.”
“As the technology provider and facilitator of Project Sovereign, we provided the DLT platforms and allowed all participants to operate confidently across the full digital sovereign bond lifecycle, catering to each individual requirement depending on their needs, including CSDs, custodians and banks,” said SWIAT chief marketing officer Jonathan Leßmann. “The outstanding collaboration from our Greek and German partners contributed to the great success of this international project, showcasing the scalability, interoperability and production-grade level of SWIAT’s solution in Europe.”
Senior figures involved at Bank of Greece included head of electronic secondary securities market section Eleni Koutrouli.