French and Swedish banks to build a joint digital bonds trading platform

Updated: 04 April 2023

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Two banks, both based in Europe, have decided to join up for a new project involving blockchain technology. The banks in question include the French investment bank Credit Agricole CIB and Swedish bank SEB. Both are known for being quite reputable and reliable and now, they seek to build a blockchain-based platform for digital bonds.

The move signals that European banks — at least some of them — might be ready to harness the benefits of blockchain technology. The new platform is meant to allow companies to issue digital bonds in a safe environment and raise capital as a result.

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The banks believe that using a blockchain network to issue bonds would contribute to greater efficiency and it would enable real-time data synchronization. Meanwhile, users would be able to manage their securities better and even raise capital by using smart contracts.

While this is an important move for building ties between blockchain technology and traditional finance, the two banks are not the only ones who have done something of this kind. Only last week, Euroclear, based in Brussels, revealed that it might release a platform for securities trading that would also be based on distributed ledger technology. The exact date for the platform’s arrival was not mentioned, although Euroclear expects it to become available later in 2023. All that is known for now is that the platform will be called Sobond and that it should come out at some point this year.

How will it work?

Credit Agricole CIB is a bank based in Paris, while SEB operates out of Stockholm. The two have decided to use a validation protocol known as Proof of Climate awaReness, and their idea is that the protocol would encourage users to minimize their carbon footprint. The whole project is about blockchain, efficiency, and being environmentally friendly, as the protocol suggests.

The protocol encourages a much lower energy consumption than what blockchains have used in the past years. It would require about the same amount of energy as non-blockchain systems, as the release explained.

“Each node will be remunerated for its efforts according to a formula linked to its climate impact,” it said, which means that the rewards would go up as the carbon footprint goes down. The environmental footprint is measured in accordance with France’s APL Data Center. It is then applied by SGS, a known certification expert.

This new platform will represent the first case of the Proof of Climate awaReness protocol operating in global capital markets, and as such, it is a considerable achievement.

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