CBDCs are around the corner, it’s just a matter of when they will become a reality with the amount of energy and resources thrown into their development. The most recent development of CBDCs comes from the Bank of France, also known as Banque de France, after it was announced that the bank had wrapped up tests for using CBDCs to settle listed securities.
Successful Crypto Tests by the Bank of France
In testing the efficiency of CBDCs, the Bank of France has concluded an experiment using CBDCs as a means of settlement for listed securities.
The experiment commenced in March last year to simulate the use of CBDCs and, upon the conclusion of the experiment, the bank released a press statement on Monday detailing the finer points of the test.
To complete the tests successfully, the Bank of France entered into some high-profile partnerships, led by Swiss financial institution SEBA Bank AG, Banque Internationale à Luxembourg, and LuxCSD. These partnering firms offered a securities depository service and a digital asset banking service.
By the end, Nathalie Aufauvre, the bank’s DG of Financial Stability and Operation, called the operation a massive success and noted that it has opened the floodgates of possibilities that come with the merger of conventional and distributed infrastructure.
How It Works
According to the press release, to simulate the use of CBDCs as a settlement for security listings, the Bank created and deployed a smart contract, utilizing the Eurosystem’s Target2-Securities (T2S) as the delivery mechanism.
For privacy, a protocol was deployed to obfuscate the values of CBDC transactions on the public blockchain. Given the fact that privacy is at the fore of user concerns, the confidential nature of the transaction will serve as reassurance.
Furthermore, the tests marked a success in the fluid communication of participants with the Target2-Securities for securities settlement.
The Head of Digital Corporate Finance at SEBA Bank noted that by leveraging on “SEBA Bank’s institutional-grade digital assets platform infrastructure,” it had contributed its quota for the possibility of a Digital European currency.
On the Flipside
- Deliberations on the digital dollar have reached a crescendo as the US looks to get in on the action.
- A drawback to the digital dollar is the privacy concerns that plague CBDCs, and also the potential weakening of local currencies.
The Journey Continues
A series of development tests are still on the cards for the Bank of France with their conclusion rates around the corner. The resolution of these tests will see the realization of a European digital currency, placing it on a pedestal to compete with for its contemporaries.
The European Central Bank has already carried out extensive research into the possibility of a digital euro.
The Bank has concluded a public consultation and has, in a recent review, highlighted that the digital version of the euro will increase global acceptance of the currency. More recently, the ECB noted that it doesn’t require data from the public for digital euro testing.