Digital Green Bonds: The Future of Finance? | European Blockchain Convention 9

[Music] 2 1 good morning everybody um our digital green bonds the future of Finance this is a topic that gadal representing cagri CIB and I prepared for you uh for the next 10 minutes my name is Bernard Nikolai and I'm passionate about finance and education I'm a former Banker working with benara and credit swis and for the last 5 years I Lector in three universities in Brussels and in Paris Sol the Brussels schools doin and clam um I also invest personally in seed and preed um in fintech but uh uh we are not here to talk about me we are here to talk about you G and I will let you first present yourself and the cagol CIB please welcome thank you Bernard and thank you for having us um so I'm G as it was said and I'm from kol CIB the CIB branch of cerol uh and I lead a group that we call the digital asset group that Foster together the energies of the entities of the C call that works on digital asset in order to be able to deliver services to uh large clients of the instit um all right thank you very much that's that that's very clear um to what extent do you believe at C agrial CIB that sustainability and the digital are very important for you and for your clients sure so obviously kol is a a bank that is very committed to the energy transition that has made commitment to The Net Zero by 2050 and for this also focuses on on helping uh the our client to find strategy to uh make that transition possible um on the other hand uh digitalization is everywhere and in particular in the banking sector which is activ um accelerating its transition uh the blockchain technology which is the focus today is one element of that digitalization and we believe it can bring uh a number of benefits such as the simplification of the process is trust and the tracability and particularly tracability of the use of funds um however the road is still quite uh long and heavy and we need to raise awareness that's what we are doing today I guess and we have to to develop the capacity the knowledge and the cap the competencies within the various organization ours obviously and the clients one also uh uh all right um uh let's take now uh a practical example please uh last June cagri CIB so your company together with SCB from Scandinavia you helped the European Investment Bank launch its first ever digital climate awareness Bond so can you remind us first who the European Investment Bank uh is and what they wanted to achieve together with you yeah sure and thank you for asking because that was quite an interesting project to be to be honest so the European Investment Bank for those who don't know that is the financing arm of the EU and so they they focus their funding to the uh action in favor of the the climate uh so it's quite normal that uh they uh look into that area and in since 2020 approximatively they have started a number of initiatives to to uh test the blockchain technology for financing uh project and for financing uh um yeah their activities and they came to us in uh 2021 and with um the project of uh uh please issue a green Bond but on a green blockchain and a public green blockchain because obviously issuing a green Bond cannot be well suited on a technology that has a brown color let's say so we we had to design and to find a way to create what they call the green blockchain whatever that meant so we did that with the Swedish Bank SCB and obviously with our custodian team Cassis um so it was really a teamwork over a period of 18 months approximatively um and relating to technology more specifically which Tech platform did you use so we had to build a new set of uh technology but I think it's also important to mention that it's this kind of subject is not only technology it's also operational and legal framework and it's not the least of the work to be honest um so first we had to build this new green blockchain Okay so we've created a new climate friendly consensus for that blockchain we call it the proof of climate met awareness I'm going to detail it later um but it's a it's a versatile generic blockchain layer right so there is nothing on there specific to bond ISU on or to finance activity so on top of that we had to design um um the sorry I'm a bit lost so yeah on top of that we had to design an operational framework and we wanted to to have that uh um in in such a way that um sorry I'm lost so we we had to design an operational framework where all the actors could cooperate to uh process the life cycle of the bond without intermediary that was the really focus point of what we're trying to do so obviously we have this underlying layer of uh generic blockchain but we wanted also to have a kind of not really a defy but at least a decentralized mechanism for managing the bond uh processing um orance the need to use the blockchain in this specific case yes particularly but but apart from technology you partner with a Luxembourg Stock Exchange which is very much spe specialized in green bonds and based on that and your experience what have you learned together with your clients you might want to cover Tech maybe a little bit because you've covered that a lot maybe legal but more generally business case opportunities and challenges and I think that we will U that we will then then close with the last question after that okay so um so what did we learn we we learned quite a lot of things but the the first thing is that the tech is not really the issue um I would have loved to be able to discuss more and to present you more the proof of climate awareness but you will be able to find that online there is a great paper that described the mechanism what we also learned is that the legal framework is still a Navy work to be done uh uh the the legal teams have been working on uh these new type of laws and they had to raise their awareness so we were in a kind of competition between the speed of the need of innovation and the carefulness uh the carefulness of those uh that protect the banks um the other important element is the fact that the benefit of the blockchain and this type of setup will only come when there will be enough scale uh of activities so it means that the act the sector needs to invest and for that we have to find ways to foster uh a convergence of the work of the actors in order to share uh the investment between the various actors and to develop something that everyone can use so that's really the word for standardization now I no uh that's a that that's great in terms of learning and maybe a last question for you what would you recommend to finance professional supervisors regulators and academics interested in the field of sustainable fi Finance based on your experience in two or three words please yeah so the word of the end um so I think to to those who are doubtful today I think I would say get involved in Project put your hands on the subject try to to understand because we've seen so many people um not very sure what this technology can bring some say it's a technology in the search for a solution but I think when we see people hands on on it we see people starting to be excited and understand really what the potential is it's a bit like internet at the beginning okay very thank you very much Gin kudel from C agricul CIB thank you very much for your practical insights and thank you very much the audience for attending do not hesitate to connect further during the conference thank you thank you very much thank you thank you very much thanks