Crédit Agricole leads tokenized SME bond trial with Bank of Italy: Blockchain revolutionizes debt instruments

Crédit Agricole leads tokenized SME bond trial with Bank of Italy: Blockchain revolutionizes debt instruments

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  • The Bank of Italy’s Fintech Milano Hub, in partnership with Crédit Agricole Italy and other entities, is trialling a tokenized bond solution targeting Italian SME debt instruments.
  • The Hong Kong Monetary Authority (HKMA) has launched a pilot program for e-HKD, a central bank digital currency (CBDC), involving 16 banks and payment providers with a dozen use cases.

Crédit Agricole explores tokenized SME bonds with Italian bank

Crédit Agricole, together with the Bank of Italy’s Fintech Milano Hub, is conducting distributed ledger technology (DLT) trials focusing on debt instruments issued by Italian small and medium-sized enterprises (SMEs), including bonds. The tokenized bond solution, powered by BlockInvest and backed by Crédit Agricole, comprises a consortium consisting of Crédit Agricole Italy, 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), tokens will only be able to be purchased by accredited investors. BlockInvest also plans to explore the possibility of a secondary market using its blockchain standard to ensure interoperability between issuers’ tokens.

Last month, Deloitte Italia launched its Open Token Factory initiative, which provides 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 testing, with plans to collaborate with the respective organizations over the next six months.

Hong Kong’s CBDC pilot program takes flight

At the same time, the Hong Kong Monetary Authority (HKMA) has announced a pilot program for its central bank digital currency (CBDC), e-HKD. The program will include collaboration with sixteen banks and payment companies across a range of applications.

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

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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 partnered with FintechHK on a Global Fast Track CBDC Challenge, with the six winners involved in the pilot.

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

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An 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 uses the same technology as the XRP Ledger.

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