In a recent tweet, French multinational investment bank Société Générale S.A. (SocGen) factored in ‘integration’ as a crucial competitive benchmark for European banking and its financial system.
« La compétitivité du système bancaire et financier européen dépendra d’une meilleure intégration. Nous avons besoin d’acteurs européens compétitifs par rapport aux autres acteurs américains et asiatiques. » @LBiniSmaghi #FutureOfEurope @europlace pic.twitter.com/I6jvQ6NZ0H
— Groupe Société Générale (@SocieteGenerale) May 10, 2019
Recently, the SocGen transacted debt backed by mortgages worth over EUR 100 million (USD 112 million) in the form of security digital assets. According to a report from the bank, a subsidiary of the bank (Société Générale SFH, the covered bond vehicle of Société Générale) may have been involved in the transaction with the main bank as the sole buyer.
The bank may have demonstrated the possibility of transacting bonds at a greater speed and efficiency using the distributed ledger and its underlying asset properties. In this case, assets were developed on the Ethereum blockchain, rather than a proprietary blockchain or distributed ledger. The bank stated:
“[…] issued EUR 100 million of covered bonds in the form of “security tokens” (home financing bonds or “OFH”) directly registered on the Ethereum blockchain. Tokens OFH was rated Aaa / AAA by Moody’s and Fitch and were fully subscribed by Société Générale.”
Moreover, the bank had stated the benefits of such transactions also included increased transparency, faster securities transfer, and settlement, noting how the Group’s digital transformation is accelerating through the use of new technologies to innovate and better serve its customers.
While it may seem like a good thing for the investment bank, others from the cryptocurrency ecosystem aren’t too impressed. Romal Almazo, cryptocurrency and digital asset lead at Capco is of the opinion that tokenization will indeed occur in the finance sector however, it would take a while before a mainstream application will be widely adopted, an outcome heavily dependent on the maturity of the industry.
Nonetheless, a sporadic increase in the integration of blockchain properties into banking can’t be so easily dismissed. Recently, Nordea reportedly expanded access to its blockchain-based trading platform we.trade to include small and medium-sized enterprises in order to service a broader spectrum of customers.
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