IFC Invests $100M in Türkiye’s First Digital Bond to Support Quake Recovery

In a pioneering financial move, Türkiye İş Bankası A.Ş. (İşbank), the country’s largest private bank, has successfully launched Türkiye’s first digitally native note (DNN)—a type of blockchain-based bond—backed by a $100 million investment from the International Finance Corporation (IFC). This transaction is also the first DNN issued by a private bank in any emerging market, underscoring Türkiye’s growing role as a leader in financial technology adoption and capital market innovation.

The proceeds from the DNN issuance will be channeled to help revitalize eleven earthquake-affected provinces in Türkiye, with a specific focus on improving access to finance for small businesses, farmers, and entrepreneurs striving to rebuild their livelihoods after the devastating 2023 earthquakes.

What Is a Digitally Native Note (DNN)?

A Digitally Native Note is a bond issued and settled entirely through Distributed Ledger Technology (DLT), commonly known as blockchain. Unlike traditional bonds that rely on centralized systems and multi-day settlement cycles, DNNs enable:

• T+0 settlement — meaning same-day execution and settlement.

• Decentralized record-keeping — providing added transparency, security, and immutability.

• Lower issuance and transaction costs — by streamlining operations.

• Greater accessibility for global investors, especially in emerging markets.

The İşbank DNN was issued through Euroclear’s Digital Financial Market Infrastructure (D-FMI) with Citi acting as the dealer, issuing agent, and paying agent. This collaboration represents a global milestone in capital markets digitalization, linking leading institutions in blockchain technology and international finance.

“This transaction is a testament to the Turkish banking sector's ability to access international financial markets, reflecting its maturity and rapid adaptation to new technologies,” said Hakan Aran, CEO of İşbank.

Supporting Earthquake Recovery and Economic Inclusion

The financing from this DNN will support a critical mission: accelerating the recovery of Türkiye’s earthquake-stricken regions. The focus will be on micro, small, and medium-sized enterprises (MSMEs) that play a vital role in local economies.

Target beneficiaries include:

• Smallholder farmers and agribusinesses in need of working capital and resilience tools.

• Entrepreneurs and family-run businesses affected by infrastructure damage and loss of income.

• Women- and youth-led enterprises looking to rebuild and expand.

“Issued on a blockchain platform, the bond is set to deliver timely working capital to thousands of businesses affected by the earthquakes,” said Makhtar Diop, Managing Director of IFC. “By using new digital technology in the bond market, we’re making financing more accessible and channeling critical capital to the entrepreneurs who need it most to rebuild and recover.”

A Strategic Step for Türkiye’s Financial Sector

The issuance is a symbol of technological transformation in Türkiye’s financial landscape and positions İşbank as a regional trailblazer in digital finance. Notably, this development aligns with broader government and private sector efforts to:

• Digitize capital markets

• Enhance transparency and efficiency

• Reduce systemic risk

• Broaden access to global investors

“Our motivation is further strengthened by the fact that the funds will support Türkiye’s eleven earthquake-affected provinces,” said Aran. “We are delighted to lead in fostering new financial instruments through ongoing technological progress.”

IFC and the World Bank Group’s Broader Strategy

The IFC’s investment is part of a wider World Bank Group initiative to support Türkiye’s post-earthquake recovery while simultaneously exploring innovative financial instruments that improve access to capital.

This DNN builds upon earlier work by the World Bank Treasury, which has issued and purchased digital bonds in pilot programs to test scalability, validate security, and set global best practices.

Key advantages of DNNs as highlighted by the World Bank include:

• Reduced post-issuance processing costs

• Enhanced liquidity due to faster and transparent settlements

• Minimized counterparty and settlement risk

• Real-time auditability and compliance checks

These advantages can be especially impactful in emerging markets, where access to efficient financial tools is often limited.

Encouraging Adoption in Emerging Markets

The success of this issuance is expected to inspire other financial institutions in emerging markets to explore DNNs and embrace blockchain-based innovations for capital market development.

By demonstrating the operational viability of DLT in a regulated financial environment, the İşbank-IFC collaboration:

• Sends a strong signal of confidence to regulators and investors alike.

• Sets a precedent for transparent, rapid, and secure bond issuances.

• Catalyzes adoption of similar technologies to deepen domestic capital markets.

This landmark $100 million DNN issuance signals a bold shift in financial innovation for Türkiye and other emerging economies. It not only supports immediate recovery needs following natural disasters but also sets the stage for a more resilient, inclusive, and technologically advanced financial future.

With IFC’s backing and İşbank’s commitment to innovation, Türkiye is demonstrating how digital financial instruments can deliver both impact and innovation—providing a model for the global financial community.