The central Bank of France announced the continuation of more tests in the coming weeks.
The Bank of France issued a statement where it explained that it completed the tests conducted on the use and issuance of the Euro Digital. Spokespersons of the central bank have considered the tests as a success and hope to continue the Central Bank Digital Currency (CBDC) project.
The statement detailed that, to conduct these tests regarding the digital currency, the Bank of France collaborated with the investment specialist Bank Societe Generale, which launched bonds in form of tokens that the bank later settled in the digital currency.
According to data from the experiment, the Societe Generale bank established the issue of EUR 40 million, representing approximately USD 44 million in security bonds created since last May 14th. The financial institution settled these security bonds as the digital currency through the blockchain platform that the Bank of France established.
In its test report, the investment bank commented that it has demonstrated the effectiveness of the system and the management of financial securities digitally. “This experimentation was performed end-to-end using blockchain infrastructures (…) It demonstrates the feasibility of financial securities being digitally settled and delivered in Central Bank Digital Currency (CBDC) for interbank settlements.”
In 2018, the Generale bank issued a security bond for the amount of EUR 100 million. However, at that time the bank issued these tokens in traditional money. In this sense, the recent change in liquidity is due to the recent digital euro tests, and “it is a new step in the transformation of Societe Generale, using the most innovative technologies, with the aim of better serving its clients.”
On the other hand, the Bank of France assured that, in the coming weeks, it will start with the next step in the digital currency project. Therefore, the most advanced tests of the system will continue. “The results of these experiments will be an important element of the Banque de France’s contribution to the more global reflection led by the Eurosystem on the interest of a CBDC,” the central bank said.
The highest financial institution in France announced these tests previously. The central bank said, last April, that it was very interested in the uses of digital currencies and that its first objective was related to their usefulness to settle security bonds. “Our interest is focused on the clearing and settlement of tokenized financial assets.”
Regarding this factor, the central bank commented that it could use this technology to conduct “wholesale” transactions, which suggests the use of this technology to settle large amounts between countries. The Institution also clarified that the project will not seek to replace traditional money or the use of physical notes and coins.
The Bank of France also commented on other occasions that it expects private companies to develop the necessary technology to make cross-border payments more viable. Otherwise, the financial institution could create, in the future, a project that makes this idea something possible.
By María Rodríguez