Societe Generale-FORGE (SG-FORGE) has announced the successful execution of a repurchase (repo) transaction involving a wholesale central bank digital currency (wCBDC) and a digital bond issued on a public blockchain. The bond, originally issued in 2020, was utilised in a repo trade that demonstrates the evolving role of distributed ledger technology (DLT) in financial markets.
Repo transactions are a core mechanism in banking, involving the sale of collateral, such as bonds, with an agreement to repurchase them at a slightly higher price. These short-term funding operations are essential for managing liquidity but are often constrained by settlement delays. The use of blockchain technology introduces the potential for instant settlement, enabling intraday repo transactions that can enhance speed and efficiency.
The transaction executed by SG-FORGE involved exploratory wCBDC issued by the Banque de France on its DL3S platform. While not explicitly focused on intraday repo, it was part of the Eurosystem’s recent wholesale DLT settlement trials, which concluded in November. When the digital bond was first issued in 2020, it was also settled using the Banque de France’s wCBDC as part of an earlier pilot project.
This repo transaction stands out for its unique elements: the other party was the central bank itself, and the collateral utilised was a digital bond issued on Ethereum’s public blockchain.
The use of DLT for repo transactions is already demonstrating its scalability, with solutions such as Broadridge’s DLR platform processing $1 trillion in transactions per month.
SG-FORGE continues to establish its leadership in blockchain-based financial innovation. It was the first to issue a bond on Ethereum in 2019 and facilitated the European Investment Bank’s (EIB) digital bond issuance on Ethereum. Additionally, SG-FORGE became the first European institution to issue a stablecoin, EURCV, and notably borrowed funds via MakerDAO’s decentralised finance (DeFi) protocol using a digital bond as collateral.
This latest transaction highlights SG-FORGE’s continued exploration of blockchain technology’s role in improving efficiency, transparency, and settlement processes within the financial system.
