That Bank of France revealed the results of its experimental program to use the central bank’s digital currency (CBDC) for the exchange and settlement of tokenized government bonds, potentially paving the way for the technology to be implemented in the country’s debt market.
According to the bank, experience has confirmed that blockchain technology can handle post-trade market operations in the CBDC, “subject to further testing with actual volumes.” It could also provide the data needed to quantify the potential efficiencies and cost savings that a blockchain-based infrastructure can offer the securities industry.
“Blockchain platforms can coexist and interoperate with existing settlement platforms,” according to Euroclear. The Central Securities Depository (CSD) functionalities “can be operated in a permitted blockchain environment, while fully respecting the rules of control, confidentiality and respect for privacy.”
However, before considering the use of a blockchain platform in production, it is still necessary to run performance tests in real situations.
The initiative was launched by Euroclearthe Belgian finance company, which used a system designed by the American technology giant IBM.
Nearly 500 institutions participated in the trial, including primary traders and depositaries active in the French market, Euroclear said in a report summarizing the results of the project. Among them are BNP Paribas and BNP Paribas Securities Services, CIB Agricultural CreditThe British HSBC and Societe Generale.
The objectives were to verify and assess whether a wide range of post-trading functionality could be performed on the blockchain, to identify the added value of the technology and CBDC for the capital markets from a user perspective and to determine potential next steps.
the “proof-of-concept” experiment was conducted in a test environment for which CBDC tokens and Treasury Bonds (OATs) government bonds issued by French treasury – was originally launched on a blockchain ledger, the report says. The banks involved played the role of players in the OAT market and depositaries to perform simulation operations for securities.
During the experiment, the French business daily Les Echos commented that the Banque de France “continues its experiments supported by the forerunner of the future digital euro”, citing the efforts of European Central Bank (ECB).
At the same time, the French initiative comes about six months after the launch of the first bond sale using blockchain technology European Investment Bank (EIB). In April last year, the European institution issued 100 million euros ($ 116.5 million) on the Ethereum (ETH) blockchain in collaboration with the Spanish bank Banco SantanderSociété Générale and the US Investment Bank Goldman Sachs.
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