Crédit Agricole CIB, the corporate and investment banking arm of Credit Agricole Group, has launched a new digital bond platform in partnership with northern European financial services group SEB.
The digital bond platform, so|bond, is looking to enable issuers in capital markets to issue digital bonds onto a blockchain network, with an aim to improve efficiency and enable real-time data synchronisation across participants.
The platform will enable issuers to raise capital and manage securities through smart contracts, programs that automatically execute, control or document events and actions according to the terms of the contract. The “open, transparent and secure” model of the platform also fosters trust between market participants – allowing further innovations, such as using a future central bank digital currency.
The blockchain network is also using a validation protocol, ‘Proof of Climate awaReness’, that encourages its participants to minimise their environmental footprint.
Although ‘Proof of Stake’ protocols uses significantly less energy than those that use ‘Proof of Work‘, there is scope for further improvement.
Because one of the major barriers to the widespread adoption of blockchain technology is its reputation as a highly energy-consuming solution, the so|bond platform enables energy consumption comparable to non-blockchain systems. The proof of climate protocol incentivises participating nodes to continually improve the environmental footprint of their infrastructures.
The protocol remunerates each node for its efforts according to a formula linked to its climate impact evaluated with the Life Cycle Assessment ISO standard: the lower the environmental footprint it is, the larger the reward will be.
‘Collaboration to convert innovations into possible market standards’
Romaric Rollet, head of innovation and digital transformation at Crédit Agricole CIB, said: “Crédit Agricole CIB is proud to contribute to the emerging market of digital assets. The platform’s innovative approach, both to the blockchain infrastructure and to the securities market, is coupled with the strong commitment to green and sustainable finance that is at the centre of our Societal Project.
“This is a key achievement, a part of Crédit Agricole CIB Digital Transformation Acceleration plan, and we welcome collaboration to convert innovations into possible market standards that better respond to our clients’ needs in an evolving regulatory environment.”
Anna Sjulander, Head of SSA DCM (sovereigns, supranationals and agencies debt capital markets) at SEB, also commented on the launch. Sjulander said: “The launch of the digital bond platform is an important step for SEB, and for the issuers and investors that join the platform, and will allow us to gain insights into what the innovative space of digital assets mean for the financial services industry.
“We see this as a great opportunity to learn what the future entails in terms of transparency, faster processing and operational simplifications, and will use a bond as the first stepping stone before expanding the use of the platform to other asset classes.”