Crédit Agricole Leads Tokenized SME Bond Trials with Bank of Italy: Blockchain Revolutionizes Debt Instruments

Crédit Agricole, along with the Bank of Italy’s Fintech Milano Hub, is conducting distributed ledger technology (DLT) trials with a focus on debt instruments issued by Italian small and medium enterprises (SMEs), including bonds. The tokenized bond solution, powered by BlockInvest and backed by Crédit Agricole, encompasses a consortium consisting of Crédit Agricole Italy, its wealth management subsidiary Indosuez, neobank Illimity, and Deloitte.

This initiative seeks to democratize investment in SME debt instruments. Despite the offering being available on the public blockchain (BlockInvest uses Ethereum and Polygon), the tokens will only be purchasable by accredited investors. BlockInvest also plans to probe the possibility of a secondary market using its blockchain standard to ensure interoperability among issuers’ tokens.

Last month, Deloitte Italy launched its Open Token Factory initiative, providing a platform for clients to tokenize assets such as real estate, non-performing loans, and debt, in partnership with BlockInvest. This tokenized bond project was among fourteen DLT initiatives selected by the Bank of Italy for trial, with plans to work with the respective organizations over the next six months.

Hong Kong’s CBDC Pilot Program Takes Flight

Concurrently, the Hong Kong Monetary Authority (HKMA) has announced a pilot program for its central bank digital currency (CBDC), the e-HKD. The program will include collaboration with sixteen banks and payment firms across a iety of use cases.

The central bank outlined its three-pronged strategy for developing a CBDC in September 2022, although the decision to proceed is still pending. This strategy involves establishing a legal foundation, and technical infrastructure for a wholesale layer of the CBDC, and potentially implementing the strategy after the pilot phase. The launch of the pilot signifies the completion of the wholesale layer design, with its development expected to take two to three years.

Major banks such as HSBC and Hang Seng Bank, along with several payment technology firms including Alipay (HK), Ripple, Gieseck+Devrient (G+D), Visa and Mastercard, are participating in the pilot. The HKMA has also collaborated with FintechHK on a Global Fast Track CBDC Challenge, with the six winners involved in the pilot.

Use case categories for the applications include full-fledged payments, programmable payments, offline payments, tokenized deposits, and settlement of Web3 transactions and tokenized assets.

One innovative use case involves exploring tokenized commercial bank deposits with HSBC, Hang Seng Bank, and Visa, potentially enabling banks to settle tokenized deposit payments with CBDC. Ripple has also announced its CBDC platform, which utilizes the same technology as its XRP Ledger.