France's central bank continues to actively explore a central bank digital currency (CBDC), completing a significant trial of a blockchain-based CBDC in the country's debt market.
More than 500 institutions in France have participated in a 10-month experiment testing a CBDC issued by the Banque de France for government bond deals, The Financial Times. reported October 19.
The CBDC test was led by Belgium-based financial services company Euroclear and used a system developed by US tech giant IBM. The CBDC test also involved the French public debt office together with the central bank and a consortium of leading finance companies operating in France, including firms such as BNP Paribas, Crรฉdit Agricole CIB, HSBC and Sociรฉtรฉ Gรฉnรฉrale.
As part of the test, participants traded government bonds and security tokens, settling them using a central bank-supplied CBDC. The project tested use cases for a CBDC in a variety of day-to-day activities, such as the issuance of new bonds, their use in repurchase agreements, as well as the payment of coupons and the exchange of agreements.
"Together we have been able to successfully measure the inherent benefits of this technology, concluding that central bank digital currencies can safely settle central bank money," said Isabelle Delorme, an executive at Euroclear.
According to Soren Mortensen, IBM's global director of financial markets, the project "went far beyond previous blockchain initiatives" because it successfully tested "most core depository and central bank processes" while eliminating the existing intermediate steps such as reconciliation between market intermediaries.
Related: G7 Leaders Issue Central Bank Digital Currency Guidelines
After launch of an experimental CBDC program In March 2020, the central bank of France has been constantly testing various CBDC use cases. In June, the Banque de France tested a CBDC to simulate the settlement and delivery of listed securities in collaboration with the Swiss cryptocurrency bank SEBA. Previously, the central bank piloted a CBDC to issue simulated shares worth $ 2.4 million using a private blockchain platform.
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