• Major banks used blockchain to complete the first cross-border repo with digital U.K. government bonds.

• The move could help unlock more of the $300 trillion in global assets by enabling faster, real-time settlement.

A group of major financial institutions has completed the first cross-border same-day repurchase agreement using the tokenized U.K. government bonds on the Canton network. This brings a major shift for blockchain technology into traditional finance. 

The group involved included DTCC, LSEG, Euroclear, Tradeweb, and Ciradel Securities, which carried out a repo using the digital version of U.K. government bonds known as GILTs. Repo is a short form of loan where one party sells a bond, and they agree to buy it back later on the same day. The bond works as collateral for the cash loan. This time, the bond and the cash were placed on the blockchain system, and the interest payments were built directly into the smart contracts.

Today, moving bonds takes a huge amount of time and days due to the different settlement systems, market cutoff times, and batch processing cycles. Because of this delay, only 10% of the world’s roughly $300 trillion in high-quality liquid assets is actively used as collateral at any given time. Using blockchain, it allows real-time settlements, 24/7 transactions, and faster movement of assets across borders, which helps banks use their assets more efficiently. 

The Canton network is built by the Digital Asset and is designed for regulated financial firms. It allows for secure and compliant transactions between large institutions. Supporters believe that the tokenizing of government bonds and other assets could improve liquidity and reduce settlement risk. If it is widely adopted, then the blockchain-based repos could unlock more efficient use of trillions of dollars in global assets.