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National Bank of France gives CBDC a go

National Bank of France gives CBDC a go

Last updated 23rd Sep 2022
Disclosure

France’s central bank launched one of the biggest CBDC trials in the EU to date, executing a series of bond transactions via blockchain. The pilot program will continue for 10 months, CoinDesk reported, citing a report by the Financial Times. The transactions were executed by the Banque de France in cooperation with a consortium of major financial market participants in the country using a system developed by IBM.

Soren Mortensen, global director of financial markets at IBM, is quoted in the report as saying:

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. We are rapidly moving towards fundamental change in the post-trade market infrastructure.

The bank executed almost 500 instructions in both primary and secondary markets. The transaction value has not been disclosed. The pilot program included the French public debt office, major French banks, and other notable establishments. It is led by securities depository Euroclear.

All eyes on the long-term outcome

France is without a doubt one of the highest-profile eurozone countries to dare such an experiment. Sweden, who uses the e-krona, is another. The Swedish Riksbank is considering digitizing its national currency.

France’s central bank published a request for proposals for CBDC “experiment” applications earlier this year in an attempt to grasp the risks and mechanisms of CBDCs better. They have also conducted a few experiments using a CBDC for cross-border payments, the wholesale market, and interbank settlements.

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China still leads the pack

At the moment, China is the biggest economy leading the pack. The Asian country has already launched a CBDC for use on the home market. It also plans to extend CBDC trials to foreign visitors of the Winter Olympics, which will be held in Beijing in 2022.

Nigeria is also pursuing CBDC

The threat of stablecoins pegged to fiat money and risks associated with private cryptocurrencies in general have led a number of countries to pursue CBDCs. On October 2, Justice Taiwo Abayomi disclosed the decision of a federal court in Abuja, Nigeria to approve rollout of the e-naira, the African country’s CBDC.

Previously, the central bank had faced claims from ENaira Payment Solutions that the name “eNaira” constituted trademark infringement. The court ruled to proceed with rollout of the CBDC pending further hearing.  

Daniela Kirova

Daniela Kirova

Daniela is a writer at Bankless Times, covering the latest news on the cryptocurrency market and blockchain industry. She has over 15 years of experience as a writer, having ghostwritten for several online publications in the financial sector.