The central bank of France has carried out a trial ‘digital euro’ transaction on the blockchain, in a process that could result in the launch of a central bank digital currency for the trading bloc.
In partnership with Societe Generale, the central bank ran a digital currency transaction involving settling €40 million of bonds issued as security tokens in exchange for digital euros. Banque de France said the test transaction shows the feasibility of using blockchain technology for digital settlements at scale.
“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.”
According to a spokesperson for Societe Generale, the experiment will help inform the central bank, along with other central banks worldwide, in the drive towards developing central bank digital currencies.
“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].”
Central bank digital currencies are digital assets on the blockchain issued by central banks, in the same way as fiat currency. As cash usage continues to decline worldwide, a number of central banks globally are known to be working on digital currencies of their own.
The Banque de France trial is one of the largest so far to take place in the Eurozone, and could pave the way for a future ‘digital euro’ to be rolled out to banks, businesses and consumers.
It follows on from an April 2018 trial in which Societe Generale issued bonds in the amount of €100 million on the blockchain, though at the team these were settled in fiat euros.
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