As part of a 10-month experiment, France’s central bank performed a number of bond trades utilizing blockchain and its own virtual currency.
According to a declaration from securities depository Euroclear, the trades were conducted by the Banque de France and a group of France’s top traders and investors using a system built by IBM in the United States.
According to FT, the pilot was led by Euroclear and comprised significant French banks and the French federal debt office. The collaboration included BNP Paribas, Crédit Agricole CIB, HSBC, and Societe Generale.
The CBDC trial is one of the EU’s biggest to date, with France seen as one of the most visible eurozone states to embark on such an endeavour. The e-krona is used in Sweden, whose Riksbank is also considering digitizing its country’s currency.
The Banque de France issued a request for proposals earlier this year for blockchain and digital money (CBDC) “experiment” apps in order to better understand the dangers and procedures of CBDCs. The bank has also conducted a variety of tests including the use of a CBDC in wholesale prices, cross-border transactions, and interbank settlements.
China is now the major economy leading the way with the installation of a CBDC for usage within its internal market, with intentions to extend CBDC trials to foreign visitors visiting the country during next year’s Winter Olympics, which will be held in Beijing. Isabelle Delorme, a Euroclear executive, stated,
We have together successfully been able to measure the inherent benefits of this technology, concluding that the central bank digital currencies can settle central bank money safely and securely.
Although the EU and the US are still in the early phases of development, the danger of independent cryptocurrencies, such as stablecoins tied to fiat money, has encouraged a number of countries to seek CBDCs.
“This project went far beyond previous blockchain initiatives because it successfully tested most central securities depository and central bank processes while eliminating current interim steps, such as reconciliation between market intermediaries,” said Soren Mortensen, IBM’s global director of financial markets, as quoted in the report. “We are swiftly approaching fundamental transformation in the infrastructure of the post-trade market.”
Following the commencement of an experimental CBDC program in March 2020, the French central bank has been evaluating various CBDC use cases on a regular basis. In partnership with Swiss cryptocurrency bank SEBA, Banque de France developed a CBDC in June to replicate the settlement and delivery of listed assets. Previously, the central bank used a private blockchain platform to pilot a CBDC that issued $2.4 million in virtual shares.