Today Societe Generale-FORGE (SG-FORGE) said it had executed a repo transaction using wholesale central bank digital currency (wCBDC) and a public blockchain digital bond it issued in 2020.
Repurchase (repo) transactions involve the sale of collateral such as bonds, and their subsequent repurchase at a slightly higher price, often overnight. They’re a common way for banks and institutions to borrow and lend cash secured by the collateral. Typically, collateral takes time to settle, which constrains the duration and speed of repo transactions. So, the benefit of blockchain is the potential of instant settlement, which enables intraday repo.
This particular example wasn’t so much about intraday repo but about the use of the Banque de France’s wholesale CBDC or ‘exploratory cash tokens’ issued on its DL3S platform. The transaction would have been part of the Eurosystem’s wholesale DLT settlement trials in central bank money that finished in November. When the original bond was issued in 2020, the settlement also used the Banque de France wCBDC as part of an earlier pilot.
DLT and Repo
Other repo transactions during the latest ECB trials used DL3S for settlement, such as an ABN AMRO trial. The SG-FORGE one was distinctive in two ways – the other party to the transaction was the central bank itself and the collateral was a digital bond issued on the Ethereum public blockchain.
Repo is a use case that is already achieving scale using DLT with Broadridge’s DLR processing $1 trillion in transactions per month.
Meanwhile, this is yet another first for Societe Generale and SG-FORGE. It was the first to issue a bond on Ethereum in 2019. It was the first to facilitate a digital bond issuance by the European Investment Bank (EIB) also on Ethereum. SG-FORGE (which is not itself a bank) was the first European institution to issue a stablecoin, EURCV. It also borrowed money from the MakerDAO DeFi protocol by pledging a digital bond as collateral.
