France Tested Its CBDC with a 10-Month Experiment: Report
One of the leading European economies – France – has reportedly fulfilled its 10-month experiment aiming to test how a central bank digital currency would interact with its debt market. The financial services company Euroclear led the project, in which some of the nation’s largest banks took part.
France Pushes for a CBDC
Last year, Banque de France – the country’s central bank – collaborated with the Belgian financial services company Euroclear and many of the leading French financial market participants.
According to a recent report by the Financial Times, the organizations traded government bonds and settled the transactions with a CBDC issued by the central bank over a 10-month trial program.
The project also tested the usefulness of such a digital token on a range of everyday activities such as paying coupons, redeeming deals, issuing new bonds, and respectively employing them in repurchase agreements.
Some of the large names in the alliance included Société Générale, BNP Paribas, and Crédit Agricole CIB, while the American multinational technology corporation – IBM – developed the system for the experiment. Soren Mortensen – Global Director of the latter – commented:
“We are rapidly moving towards a fundamental change in the post-trade market infrastructure. 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.”
Isabelle Delorme – Deputy Chief Executive of Euroclear France – also aired her thoughts on the trial. According to her, the collaboration between those institutions has been successful as they have shown that “the central bank digital currencies can settle central bank money safely and securely.”
Change of Heart?
Exploring and potentially launching a central bank digital currency seems like a surprising move coming from Banque de France since the head of the institution – François Villeroy de Galhau – recently labeled that financial tool as risky and urged for strict regulations.
This summer, he also argued that private cryptocurrencies represent just as much danger to the European Union. The top banker warned that the EU should act fast and build a regulatory framework around bitcoin and the altcoins. Without hasty action, the financial dominance of the Union would be endangered, he warned:
“Whether it is digital currencies or payments, we in Europe must be ready to act as quickly as necessary, or take the risk of an erosion of our monetary sovereignty.”
The banker stressed that the international performance of the euro is also threatened if the watchdogs do not apply regulatory actions. In his opinion, the move should come into force in the “next one or two years,” or the EU would “lose its momentum.”
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