HM Treasury has appointed six Joint Lead Managers for DIGIT, the UK's first digitally native government bond, marking a significant milestone in the development of the country's digital capital markets infrastructure.
The pilot, expected to launch by Q1 2027, will test how distributed ledger technology (DLT) can be applied across the issuance and full lifecycle of a sovereign bond, including on-chain settlement within the Digital Securities Sandbox.
What DIGIT could mean for capital markets
Two executives at the forefront of digital capital markets infrastructure have offered their perspectives on the initiative.
Richard Baker, CEO and Founder of Tokenovate and member of HM Treasury's Wholesale Digital Markets Industry Taskforce, commented: "A digitally native government bond is an important test case because it brings tokenisation into one of the most established parts of capital markets and puts the operational questions around issuance, settlement and asset servicing into a live market environment."
"The success of the pilot will depend on how well digital instruments can move through the wider financial system. On-chain settlement will need to connect with cash, custody and existing settlement infrastructure, with common standards and legal certainty keeping lifecycle events consistent across systems. Building this connectivity in from the outset will help show how tokenisation can improve liquidity and market efficiency at scale, while avoiding the creation of new digital silos."
Marius Jurgilas, CEO of Axiology and former central banker with experience at the Bank of England, ECB, and Norges Bank, added: "It's a welcome step to see the government putting its weight behind digital securities in a practical way, bringing banks together to work on how a sovereign bond will be issued and distributed using this infrastructure."
"While settlement efficiency is a positive by-product of this work, initiatives like this give the industry an opportunity to improve how capital is raised and distributed. The experience gained through DIGIT can help establish processes that other issuers can use, giving the pilot a value beyond government borrowing."
"Across Europe, fragmented markets still make it difficult for smaller companies and public bodies to reach investors outside their home country. Connecting issuance, distribution, trading and settlement through regulated infrastructure could broaden their investor base and create more funding options. Government support for that development can help establish the foundations for a market in which capital moves more easily between countries and reaches a wider range of issuers."
