The French central bank is continuing to investigate a central bank digital currency (CBDC), having completed a major experiment of a blockchain-based CBDC in the country’s debt market.
The Financial Times reported on Tuesday that around 500 institutions in France took part in a 10-month trial of a CBDC issued by Banque de France for government bond trading.
Euroclear, a Belgian financial services business, led the CBDC experiment, which employed a system created by IBM, an American technological powerhouse. The CBDC test included BNP Paribas, Credit Agricole CIB, HSBC, and Societe Generale, as well as the French public debt agency, the central bank, and a consortium of significant financial corporations operating in France.
The participants in the experiment traded government bonds and security tokens, settling their transactions using a CBDC provided by the central bank. The research looked at how a CBDC may be used in a variety of scenarios, including issuing new bonds, utilizing them in buyback agreements, and paying coupons and redeeming offers.
“We have successfully assessed the inherent benefits of this technology as a group, finding that central bank digital currencies can safely and securely settle central bank money,” Euroclear executive Isabelle Delorme stated.
The project “went well beyond previous blockchain initiatives,” according to Soren Mortensen, IBM’s global director of financial markets, because it successfully trialled “most central securities depository and central bank processes” while eliminating existing intermediate steps like market intermediary reconciliation.
The French central bank has been exploring several CBDC use cases since establishing an experimental CBDC program in March 2020. In June, Banque de France collaborated with Swiss cryptocurrency bank SEBA to develop a CBDC to replicate the settlement and delivery of listed securities.
Previously, the central bank used a private blockchain platform to test a CBDC that issued $2.4 million worth of virtual shares.