As a seasoned researcher who has witnessed the evolution of financial technology over the past few decades, I must say that the news of Societe Generale completing the first repo transaction using blockchain technology within the Eurosystem’s central bank is nothing short of groundbreaking. This event signifies a significant step towards the mainstream adoption of blockchain technology in traditional finance, which has been my area of interest and research for years.
Society General has successfully executed the initial repository transaction employing blockchain technology within the Eurosystem’s central bank network.
The announcement on December 13 stated that the transaction was conducted jointly with the Banque de France using Society’s digital asset subsidiary, Forge, as the intermediary.
As a researcher, I’d describe a repo transaction as follows: In this financial arrangement, I (or another party) sell a security to someone else with an agreement to buy it back at a future date at a fixed price. Essentially, it functions as a short-term lending system, where securities act as collateral.
Regarding the Forge transaction, the repository dealt with digital bonds that were tokenized and launched in 2020 on the Ethereum network, serving as security. In return for these securities, Central Bank Digital Currency (CBDC) issued by the Banque de France was swapped as cash.
Societe Generale stated that this transaction showcases the technical capability for interbank refinancing transactions to be conducted over a blockchain.
“It illustrates the potential of a central bank digital currency to improve the liquidity of digital financial securities.”
Transforming conventional financial instruments, such as bonds, into digitized tokens that symbolize ownership is what’s known as securities tokenization. These tokens, when exchanged on a blockchain network, offer unalterable transaction records and expedited settlement periods compared to traditional methods.
By the end of December 2024, digital representations of U.S. debt securities, tokenized by private entities, amounted to approximately $2.9 billion.
Since 2021, the Bank of France has been investigating potential applications for its Central Bank Digital Currency (CBDC). This exploration began with a trial run that included several domestic banks operating in the country’s debt market, such as Societe Generale, BNP Paribas, Credit Agricole CIB, and HSBC.
The establishment has dabbled in international trades as well. In the year 2024, our central bank established a bilateral partnership with the Hong Kong Monetary Authority (HKMA) for joint work on Central Bank Digital Currencies (CBDC) and tokenization endeavors.
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2024-12-13 19:59