The Bank of France has successfully completed an experiment with CBDC to settle listed securities. The test was carried out with the help of an alliance of partners led by SEBA Bank, a digital asset banking provider based in the Swiss crypto valley.
Central bank and crypto company carry out successful CBDC test
As part of a program launched in March 2020, the central bank’s digital currency (CBDC) has been used to simulate the settlement of listed securities, the Bank of France said in a press release released Monday. On June 18, the regulator simulated the issuance of CBDC tokens on a public blockchain while maintaining control of the transactions.
A dedicated smart contract was developed and deployed, the bank explained, and the Eurosystem’s Target2-Securities (T2S) were used as the delivery platform. All operations were carried out in cooperation with the Swiss-licensed digital asset banking provider SEBA Bank AG, Banque Internationale à Luxembourg, the oldest multi-business bank in the Grand Duchy, and LuxCSD, a central securities depository.
The confidentiality of the processed transactions was achieved through a protocol that uses zero-knowledge evidence to encrypt and obfuscate the values of the CBDC transactions over a public blockchain, SEBA explained in a separate announcement. Attendees successfully demonstrated the ability of distributed ledger technologies to communicate with T2S for settlement of listed securities, the crypto bank emphasized.
BOF Director General for Financial Stability and Operations Nathalie Aufauvre noted that the experiment demonstrated the opportunities presented by the interaction between conventional and distributed infrastructures. She stressed that the test paves the way for other alliances aimed at capitalizing on the opportunities offered by financial investments in a blockchain environment.
Bank of France continues further CBDC studies
Other tests planned under the current program will continue until mid-2021, the French central bank added. “The success of this experiment will be an important contribution to the Eurosystem’s global reflection on the benefits of CBDC and blockchain technologies to improve payment and processing of transactions,” concluded his Swiss partner.
“We are pleased to have led the successful completion of this experiment with Banque de France and to have used the institutional infrastructure of SEBA Bank’s digital assets platform to help Banque de France in this important development and its contribution to the possibility of a digital European currency. “, says Matthew Alexander, Head of Digital Corporate Finance at SEBA Bank in Zug.
The European Central Bank (ECB) has deepened its analysis of whether and how the euro zone’s common currency should be digitized this year, and its Governing Council is expected to decide on a possible digital euro at a meeting in July. The ECB recently published a review of the international role of the euro, in which the bank found that a digital currency could potentially increase the global attractiveness of European money.
Earlier this month, the Bank of France and the Swiss National Bank announced a collaboration with the Bank for International Settlements’ Innovation Hub to test the use of the central bank’s wholesale digital currencies in cross-border payments. The tests are being conducted with the support of a private sector consortium led by Accenture, which also includes Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS.
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