- The central bank of France has conducted a successful test of its blockchain-based digital euro in cooperation with Société Générale
- €40 million worth of covered bonds, issued as security tokens by Société Générale, were fully settled in digital euros
- More tests with other banks will follow in the forthcoming weeks as part of Banque de France’s ongoing experiments with digital euro
After launching its digital euro experimental program in April, the central bank of France announced on Wednesday, May 20th, that they have conducted a successful test of their blockchain-based digital currency.
Cooperation with banking giant Société Générale
Banque de France reveled that the first successful testing of their digital euro was conducted in cooperation with Société Générale. The French multinational investment bank participated in the experiment by issuing €40 million (around $44 million) worth of covered bonds as security tokens, which were then settled in the central bank’s digital euros. Société Générale wrote:
“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.”
A similar experiment was conducted already in April 2018, when the investment bank issued €100 million worth of bonds as security tokens. However, in 2018, they those were settled in traditional euros. Société Générale stated that the latest test, which was fully digital and blockchain-based, “is a new step in scaling up in its transformation, using the most innovative technologies, with the aim of better serving its clients”.
More tests with different players to follow
Banque de France launched its digital euro experimental program in April 2020, stating that the program has three main objectives to, identify the benefits of CBDC, to show how traditional interbank settlement can be carried out using central bank digital currency (CBDC) and analyze effects of CBDC on financial stability and monetary policy.
“The aim is to explore the potentialities offered by this technology, and to identify concrete cases integrating Central Bank Digital Currencies in innovative procedures for the clearing and settlement of tokenized financial assets,” the Central bank of France wrote when it launched the program.
After the first successful testing of its digital euro, the Banque de France revealed they have scheduled more tests involving other players “in the next few weeks”. They hope that their tests will represent an “important contribution to the more global reflection led by the Eurosystem on the interest of [a CBDC]”, said the central bank.
For now, the research is focusing on “wholesale” CBDC use cases and France is not planning to replace physical coins and banknotes.
The European Central Bank encourages banks to investigate the benefits of CBDCs and a digitalized euro, at times going as far as stating that it is willing to issue its own digital currency should the private sector fail to make cross-border payments faster and cheaper.
Similar news have been coming from Austria, where Raiffeisen Bank International is putting an effort into digitalization and tokenization of the national currencies.
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