Banque de France (the French central bank) has announced the successful testing of its central bank digital currency (CBDC) in collaboration with multiple financial and tech groups.
The experiment was considered to be successful on December 17th of 2020 but wasn’t announced until January 19th of this year via a press release. It was completed in collaboration with IZNES, SETL, CACEIS, CITIGROUP, GROUPAMA AM, OFI AM, and DXC.
Conducted by Banque de France and its collaborators, the experiment consisted of the subscription and redemption of money market funds using blockchain technology provided by SETL, with over 2 million euros being transacted during the experiment (PDF).
Banque de France Shows Interest in Digital Currency Rising
The bank opened applications for CBDC experimentation back in March of 2020 intending to explore the potential offered by the technology, as well as identifying concrete cases in which CBDC could be integrated into innovative procedures.
Multiple countries in the European Union have been vocal about their interest in developing a digital Euro, with other countries like Italy and the Netherlands taking steps in proposing legislation and experimenting with blockchain technology in collaboration with local banks.
A Successful Experiment
SETL, in collaboration with the BDF and IZNES technology teams, provided the distributed ledger technology (DLT) and the underlying infrastructure for the issuance and redemption of the CBDC tokens.
The central bank then issued CBDC tokens on the private blockchain to simulate cash settlements by developing and deploying smart contracts. The bank was able to issue and control the circulation of the tokens throughout the simulation process.
On the other hand, CITI and CACEIS collaborated by purchasing CBDS tokens as participating commercial banks, which allowed the experimenters to replicate possible real-life scenarios and workflows.
While this experiment was a success, other experiments will be running until mid-2021, according to the bank as it hopes the findings “will be an important part of the Banque de France’s contribution to the Eurosystem’s more global reflection on the benefits of CBDC.”
Digital Currencies Powered by Blockchain Are the Future
The successful completion of this experiment represents an important step forward toward the adoption of CBDC by allowing regulators and legislators to assess the positive impact digital currencies can have on the national economy.
By using blockchain technology, central banks will be able to enhance the efficiency and resilience of financial transactions, while improving security and accessibility by settling them on-chain.
Sir David Walker, SETL Chairman, referred to the results by stating: “The successful completion of a central bank digital currency live experiment with BDF confirms that SETL is uniquely positioned to help transform Financial Markets. We are delighted to be recognized for the role we play in these significant market transformation programs.”
While some CBDCs use blockchain technology as their backbone, they are different from cryptocurrencies like Bitcoin and Ethereum due to the centralization of the ledger and the ability of central banks to regulate the issuing and supply of the currency.
A Boost for the Industry as a Whole
However, this new application of blockchain technology could further boost blockchain adoption and have an impact on how everyday people interact with digital assets, facilitating the transition to cryptocurrencies and decentralized platforms.
This collaboration also provides the companies participating in them with important data that could lead them to further develop their technology for the benefit of the entire blockchain ecosystem:
In the words of Philippe Morel, SETL CEO: “Further to the successful delivery of our two market infrastructures – the Fund Platform IZNES and the ID2S Central Securities Depository, we are now excited to take our Payments offering to the next level. Together with our proven track record in delivering regulated Market Infrastructures, this further strengthens SETL’s strategic capabilities.”
The post Banque de France Successfully Completes First CBDC Transactions appeared first on Blockonomi.
January 22, 2021 at 06:30AM https://blockonomi.com from Blockonomi https://ift.tt/3sOJjKn
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