The central bank of France, Banque de France, has made some progress with regards to the development of a European Central Bank Digital Currency (CBDC). On Monday, the bank officially announced the successful completion of a CBDC experiment with major Switzerland-based cryptocurrency bank, SEBA.
What was the experiment about?
The experiment consisted of using the CBDC to simulate the settlement of listed securities using TARGET2-Securities (T2S), a European securities settlement engine, in a test environment, through the existing conditional delivery of securities functionality [T2S Conditional Securities Delivery (CoSD)]. From a technological point of view, the Banque de France simulated the issuance of CBDC tokens on a public blockchain, while preserving the control and confidentiality of transactions, based on the development and deployment of a dedicated smart contract.
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The operations were carried out in collaboration with SEBA Bank, Banque Internationale à Luxembourg and Luxembourg central securities depository (LuxCSD). SEBA purchased securities from Banque Internationale à Luxembourg, with post-trade settlements managed by LuxCSD.
What they are saying
Nathalie Aufauvre, Director General of Financial Stability and Operations of the Banque de France stated, “This experiment has made it possible to demonstrate the possibilities of interactions between conventional infrastructures and distributed infrastructures and paves the way for other alliances with the objective of taking advantage of the opportunities offered by financial assets in a blockchain environment.”
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The bank noted that the new CBDC test is part of an experimental CBDC program that was launched in March 2020, to test CBDC integration for settlements. The program’s other experiments will continue until mid-2021 as Banque de France, in addition to other central banks in Europe, tests the viability of CBDCs. In the report, it stated, “All the lessons will be an important element of the Banque de France’s contribution to the more global reflection of the Eurosystem on the interest of a CBDC.”
