France trials a CBDC for settling government bond transactions
- Banque de France executed these transactions as part of a 10-month CBDC trial.
- The central bank tied with banks like Societe General, BNP Paribas, and HSBC in this pilot.
- This pilot makes France one of the highest eurozone members to trial a CBDC.
The central bank of France has completed a series of government bond transactions on the blockchain. A report disclosed this news earlier today noting that the bank executed these transactions through a central bank digital currency (CBDC). Reportedly, these transactions are part of a 10-month trial.
According to the report, Banque de France joined hands with a group of leading market participants to complete these transactions on an IBM-developed system. The participants in the trial were Euroclear, BNP Paribas, Crédit Agricole CIB, HSBC, Societe Generale, and the French public debt office.
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In total, the central bank and the trial participants executed 500 instructions in both primary and secondary markets. Banque de France, however, failed to disclose the financial details of the transactions.
Commenting on this development, IBM’s Global Director of Financial Markets, Soren Mortensen, said,
This project went well beyond previous blockchain initiatives because it successfully tested most central securities depository and central bank processes whilst eliminating current interim steps, such as reconciliation between market intermediaries.
Allegedly, this trial is the largest of its kind in the European Union. France has also become one of the highest eurozone members to roll out such an experiment, with Sweden’s Sveriges Riksbank being the other central bank in the EU that has made progress with its e-krona project.
The race to launch CBDCs intensifies
This news comes after Banque de France published a request for proposals for CBDC experiments. Through this publication, the central bank sought to study the risks and mechanisms of CBDCs. Apart from trialling a CBDC in settling government bonds, Banque de France also tested the use of a CBDC in cross-border payments, the wholesale market, and interbank settlements.
The bank’s CBDC efforts come as financial regulators continue voicing concerns over private digital currencies, especially stablecoins. While the US and the EU initially dragged their feet regarding CBDC development, the mounting concerns over stablecoins have seen various jurisdictions initiate CBDC projects.
CBDCs have also spread beyond the Western world and Asia, with several African countries jumpstarting efforts to launch digital versions of their fiat currencies. Examples are Nigeria, South Africa, Mauritius, and Ghana.
Although multiple countries are experimenting with CBDCs, China remains the leader in the race to issue a digital version of its national currency. The country, which recently imposed an outright ban on crypto, has allowed citizens to trial its digital renminbi on several occasions.
With all domestic tests being successful, China now seeks to open its CBDC to foreigners during the upcoming Winter Olympics in Beijing.