Key facts
- The UK plans to issue its first digital sovereign bond by early 2027.
- The bond will be sterling-denominated and operate on HSBC's Orion platform.
- It will be tested within the Bank of England and Financial Conduct Authority's Digital Securities Sandbox.
- The bond aims to reduce settlement times, reconciliation work, and operating costs.
- The Bank of England plans to make the digital gilt eligible as collateral in market operations.
The United Kingdom is preparing to launch its first digital sovereign bond by early 2027, aiming to become the first G7 nation to issue government debt on a distributed ledger. Chancellor Rachel Reeves announced the timeline, stating that the Digital Gilt Instrument, or DIGIT, will be a sterling-denominated security issued on HSBC’s Orion platform.
The bond will operate within the Bank of England and Financial Conduct Authority’s Digital Securities Sandbox, a pilot program initiated in 2024 to assess whether blockchain infrastructure can decrease settlement times, reconciliation efforts, and operational expenses. HSBC was selected in February to manage the platform, having previously facilitated over $3.5 billion in digital bond issuances via its Orion blockchain.
Bank of England Governor Andrew Bailey indicated that the central bank intends to ensure DIGIT's eligibility as collateral in its market operations. This move could potentially support tokenized repurchase agreements and enable banks to utilize the bond in central bank funding transactions. The specific size, maturity, coupon, investor eligibility, and settlement asset for the bond have not yet been disclosed by the Treasury. The initial issuance will be separate from the government's conventional gilt-financing program.