The French central bank is launching one of the largest CBDC trials in the EU to date. CBDCs are digital currencies backed by central banks. In the process, the Banque de France plans to process a number of bond transactions via blockchain. The pilot program will last 10 months, CoinDesk reported, citing Financial Times. The transactions were conducted in collaboration with a consortium of the country’s major financial market participants 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 far beyond previous blockchain initiatives by successfully testing most CSD and central bank processes. At the same time, it eliminated current intermediate steps, such as reconciliation between market participants. We are rapidly moving towards a fundamental change in the post-trade market infrastructure.”
The bank executed nearly 500 orders in both the primary and secondary markets. The value of the transactions was not disclosed. The pilot program involved the administrator for French sovereign debt, major French banks, and other well-known institutions. The whole thing is being run by securities custodian Euroclear.
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All eyes on the long-term bottom line
France is the largest eurozone country to dare such an experiment. Another experiment is underway in Sweden with the e-Krona. The Swedish Riksbank is considering digitizing its national currency
The French Central Bank issued a call for experimental applications of CBDCs earlier this year to better understand their risks and mechanisms. The central bank has also conducted some experiments with a CBDC for cross-border payments, the wholesale market, and interbank settlement.
China still leads the way
Right now, China is the largest economy leading the field. The Asian country has already introduced a CBDC for use in its domestic market. It also plans to extend CBDC to foreign visitors to the Winter Olympics, which will be held in Beijing in 2022.
Nigeria also aims for CBDC
The threat of stablecoins pegged to traditional currencies and the risks associated with private cryptocurrencies, in general, have prompted a number of countries to adopt CBDCs. On October 2nd, Justice Taiwo Abayomi announced the decision of a federal court in Abuja, Nigeria, to approve the launch of the eNaira. That is the CBDC currency of the African country.
Previously, the central bank had been sued by ENaira Payment Solutions, claiming that the name “eNaira” was a trademark infringement. The court decided to continue the introduction of the CBDC until a further hearing.
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