The Banque de France (Bank of France) officially announced the completion of a CBDC experiment with the major Swiss-based cryptocurrency bank SEBA on Monday.

The experiment, which was carried out in collaboration with SEBA, Luxembourg private bank, and the Luxembourg central securities depository LuxCSD, used a CBDC to simulate the settlement and delivery of listed securities on TARGET2-Securities (T25), a European securities settlement engine.

The French central bank simulated CBDC issuance on a public blockchain, harnessing a dedicated smart contract to trigger delivery of the securities. Nathalie Aufauvre, general director of financial stability and operations at Banque de France, said,

The latest CBDC test demonstrated the possibilities for conventional finance systems and distributed systems to interact. It also paves the way for other alliances in order to benefit from the opportunities offered by financial assets in a blockchain environment

Previously, in January 2021, the Banque de France successfully conducted a central bank digital currency (CBDC) experiment using a blockchain platform for interbank settlement. It involved a €2 million (US$2.43 million) settlement on a private blockchain provided by U.K. blockchain startup SETL.

The French bank, along with Citi, CACEIS, Groupama AM, OFI AM, and DXC, used SETL’s fund management platform Iznes as part of the process for the first CBDC fund settlement. François Villeroy de Galhau, Governor of the Banque de France said in Sep. 2020 speech,

Central banks need to have an in-depth understanding of innovation and shouldn’t be afraid to “learn by doing”. The Banque de France is now engaging with the innovators from the private sector to conduct a program of 8 experiments, to integrate a wholesale CBDC into innovative procedures for exchanging and settling tokenized financial assets

The French bank issued a request for proposals for CBDC experiment applications in 2020. The project aimed to assist France’s central bank in understanding the risks and mechanisms of CBDCs, as well as to contribute to the eurozone’s digital cash discussion.

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