France pilots use of Blockchain, CBDC for its Govt bonds
France's Central Bank has executed a series of its bond transactions on the blockchain using its own digital currency (CBDC) as a part of a 10-month experiment.
What is a CBDC?: A central bank digital currency (CBDC) is the virtual form of a country's fiat currency issued and regulated by a nation's monetary authority or central bank. Euroclear, a Belgium firm, has set up the platform using a system developed by IBM.
As part of the trial, the participants traded government bonds and security tokens, settling them using a CBDC supplied by the central bank. This CBDC trail is one of the European Union's largest to date, where nearly 500 transactions were executed during the trial. The trial is part of a wider initiative commissioned in March 2020 to test the integration of a central bank digital currency to exchange and settlement tokenised financial assets between financial intermediaries.
We have together successfully been able to measure the inherent benefits of this technology, concluding that the central bank digital currencies can settle central bank money safely and securely, Euroclear executive Isabelle Delorme said.
The full scope of the project covers an extensive range of core securities settlement operations, including securities issuance, primary market, secondary market trades and interest payments.
"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," said Soren Mortensen, global director of financial markets at IBM
The threat of private cryptocurrencies, including stable coins pegged to fiat currencies, has prompted many nations to pursue CBDC. China is currently the largest economy to implement CBDC within its domestic market.