UK plans first G7 digital sovereign bond by early 2027

UK plans first G7 digital sovereign bond by early 2027

The U.K. plans to issue its first digital sovereign bond by early 2027, becoming the first G7 nation to place government debt on a distributed ledger.

The gilt will list on HSBC’s Orion platform within the Bank of England and Financial Conduct Authority’s Digital Securities Sandbox to test reduced settlement times and costs.

Chancellor Rachel Reeves announced the timeline in her annual Mansion House speech to industry leaders. The government plans further issuance after the initial sale.

The Digital Gilt Instrument (DIGIT)

The Digital Gilt Instrument, known as DIGIT, will be a sterling-denominated government security issued on HSBC’s Orion platform and will operate inside the Bank of England and Financial Conduct Authority’s Digital Securities Sandbox.

The Treasury announced the pilot in 2024 to test whether blockchain infrastructure could reduce settlement times, reconciliation work and operating costs. HSBC was appointed to run the platform in February, having issued over $3.5 billion in digital bonds through its Orion blockchain.

Collateral eligibility

Speaking at the same event, Bank of England Governor Andrew Bailey said the central bank will work to make DIGIT eligible as collateral in its market operations. That could support tokenized repo and allow banks to use the bond in central bank funding transactions.

Bailey said the bank plans to make the bond eligible as collateral in market operations, enabling banks to use it in central bank funding transactions.

Undisclosed details

The Treasury has not disclosed the bond’s size, maturity, coupon, investor eligibility or settlement asset. The initial sale will sit outside the government’s conventional gilt-financing program.

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