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 record of the ownership and transaction history of these tokens.
In a statement, Societe Generale said it has executed a tokenized bond transaction on Ethereum entirely through its subsidiary FORGE.
The bonds were deposited to serve as collateral in exchange for the central bank digital currency (CBDC) issued by the French central bank, Banque de France, on its DL3S blockchain.
Societe Generale says the transaction marks the first time a repurchase agreement (repo) with a Eurosystem member has been executed on a blockchain. Repo is a short-term agreement to sell securities and later buy them back at a predetermined higher price.
“This is the first repo transaction (Sale and Repurchase Agreement) in digital securities (Security Tokens) with the central bank of a Eurosystem.”
The bank says the transaction demonstrates the technical feasibility of executing interbank refinancing transactions 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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