European banking giant Societe Generale has successfully completed a collateralized market transaction using tokenized bonds issued in 2020 on the Ethereum (ETH) blockchain.
Tokenized bonds are a digital representation of traditional bonds that can be held and traded on a blockchain.
The immutable nature of blockchains aims to promise a tamper-proof recording of ownership and transaction history of these tokens.
In a statement, Societe Generale says it fully executed a tokenized bond transaction on Ethereum through its subsidiary FORGE.
The bonds were deposited to serve as collateral in exchange for the central bank digital currency (CBDC) that France’s central bank, Banque de France, issued on its DL3S blockchain.
Societe Generale says the transaction marks the first time a repurchase agreement (repo) with a member of the Eurosystem was executed on a blockchain. Repo is a short-term agreement to sell securities and repurchase these later at a predetermined higher price.
“This is the first repo transaction (Sale and Repurchase Agreement) in digital securities (Security Tokens) with a Eurosystem’s central bank.”
The bank says the transaction demonstrates the technical feasibility of conducting interbank refinancing operations directly on the blockchain.
“It illustrates the potential of a Central Bank Digital Currency to improve the liquidity of digital financial securities.”
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