BBVA closes blockchain-powered loan with Madrid’s regional government

Spanish banking giant BBVA has announced that it has closed the first blockchain-powered sustainable “Schuldschein” loan with Madrid’s government.

Structured as per the German debt instrument, the €220 million deal is earmarked to fund eligible projects: those projects that have a positive environmental and social impact for the residents of the region. The loan was prepared under the Region of Madrid’s Sustainable Financing Framework.

BBVA and Madrid’s regional government used blockchain technology to manage the negotiation of the deal and used their own nodes to establish a network between them.

According to the official release, the loan is the first of its kind with a public sector administration. BBVA said that the debt instrument has been designed to foster transparency and finance sustainable development in the region of Madrid.

The blockchain-based deal enabled both parties to make progress with their digitization processes. The technology facilitates access for all involved participants and reduces the negotiation time by digitizing the entire process.

In addition, the DLT (distributed ledger technology) network that was established between BBVA and Madrid’s government ensured traceability and immutability during the negotiations and in the resulting agreements, the release said.

BBVA is one of the founding members of the International Association of Trusted Blockchain Applications (INATBA), which was officially launched on April 03 in Brussels.

BBVA has been carrying out several blockchain pilots for quite some time. This includes the first syndicated loan using blockchain technology with Red Eléctrica and the first green structured bond using this technology for Mapfre, as well as other corporate loan operations.