KPMG and KfW Release Analysis on Digitalisation of Germany’s Capital Markets Using Blockchain Technology

KPMG and KfW Release Analysis on Digitalisation of Germany’s Capital Markets Using Blockchain Technology

(IN BRIEF) KPMG and KfW have unveiled an analysis evaluating the maturity of DLT-based capital markets in Germany and Europe, with a focus on KfW’s blockchain-based bond issues. The study highlights the importance of developing scalable digital markets to ensure Germany and Europe’s competitiveness and digital sovereignty in global finance.

(PRESS RELEASE) FRANKFURT, 27-Feb-2025 — /EuropaWire/ — KPMG and KfW have released a comprehensive analysis that delves into the digitalisation of Germany’s capital markets, focusing on the implementation of Distributed Ledger Technology (DLT) through the blockchain-based issuance of KfW’s digital bonds. The report offers a detailed examination of the challenges and opportunities involved in using DLT for scalable capital market transactions, and is based on practical experiences from the stakeholders involved in the issuance of the first blockchain-based KfW bonds in the summer of 2024.

The goal of the report is to shed light on the practical aspects of DLT-based transactions and illustrate their potential to transform the capital markets landscape. By incorporating the experiences of key players, including Bankhaus Metzler, Boerse Stuttgart Digital, Deutsche Bank, and others, the analysis provides real-world insights into how the transition to digital capital markets is unfolding.

Tim Armbruster, Treasurer at KfW, highlighted the importance of adopting new technologies to improve efficiency: “As one of the world’s leading issuers, we are committed to exploring new technologies to enhance our capital market refinancing. This is a learning process for us, but it is one that our team is highly engaged in,” he said. He also emphasized the broader goal of fostering collaboration to keep the German and European capital markets competitive on the global stage.

Jens Siebert, Partner at KPMG Financial Services, underscored the significance of this shift in the financial sector: “Germany and the EU must take a proactive role in advancing DLT-based capital markets. This technology can improve transaction efficiency and security, offering enormous potential for the financial industry,” he stated.

A key element of the joint publication is its accessibility, with clear explanations of technical terms and a glossary to guide readers through the complexities of DLT. The report also provides valuable lessons from stakeholders’ experiences and outlines several recommendations for scaling DLT in capital markets. Notably, the analysis highlights the need for more market participants with both the expertise and institutional capacity to engage with digital securities, which is critical to building liquidity in secondary markets.

The analysis also draws attention to the important role of central bank money in facilitating secure and efficient DLT transactions. The recent announcement by the European Central Bank in February 2025 that it will continue to handle DLT transactions with central bank money as part of a “two-track approach” is seen as a positive step in fostering confidence in digital securities.

One of the report’s key findings is that the Electronic Securities Act (eWpG) of 2021, along with the European Central Bank’s ongoing exploratory work, provides a solid foundation for the further development of DLT-based capital markets. However, the study also identifies areas that require adjustment, particularly in terms of central bank eligibility for DLT-based securities, to ensure that they are treated similarly to traditional securities over time.

The full report will soon be available on the KPMG and KfW websites, providing an in-depth look at how DLT is shaping the future of capital markets in Germany and beyond.

Please find an extract of the joint analysis of the respective websites of KPMG and KfW; the full joint analysis will be available shortly there.

Media Contact:

Mrs. Nathalie Cahn
+49 69 7431-2098
Nathalie.Cahn@kfw.de

SOURCE: KfW Entwicklungsbank GmbH