Societe Generale executes blockchain transaction with SG-FORGE

This marks the first repo transaction in digital securities (Security Tokens) with a central bank of the Eurosystem.

The transaction involved Societe Generale depositing bonds issued in 2020 on the public Ethereum blockchain as collateral with the Banque de France, in exchange for Central Bank Digital Currency (CBDC) issued by the Banque de France on its DL3S blockchain.

This highlights the technical feasibility of conducting interbank refinancing operations directly on blockchain and showcases the potential of Central Bank Digital Currencies (CBDCs) to improve the liquidity of digital financial securities.

The deal underscores Societe Generale's commitment to advancing innovative financial markets through its expertise in financial structuring and the technological capabilities of SG-FORGE.

This transaction sets a precedent for the future of digital financial markets and blockchain-based financial operations.

Revolutionising repo transactions with digital securities and blockchain

Traditionally, repo agreements have relied on physical securities, such as government bonds, as collateral, facilitating a well-established, liquid market that supports daily trading volumes in the trillions of dollars.

The evolution of repo transactions in the context of digital securities marks a significant shift in the way collateral is managed and transferred. Digital securities, or tokenized assets, are blockchain-based representations of traditional financial instruments, including bonds, stocks, or even commodities. The use of digital tokens for collateral in repo transactions introduces numerous advantages over traditional systems, particularly in terms of speed, transparency, and security. Blockchain technology enables real-time settlement, reducing counterparty risk and improving operational efficiency. By digitising securities, the process becomes more accessible and cost-effective, eliminating the need for intermediaries and minimising the settlement times associated with physical securities.

The use of digital tokens in repo transactions also opens up new possibilities for the broader financial ecosystem. Tokenized assets can be more easily fractionalised, making it possible for smaller institutional players or even retail investors to participate in the repo market.