A consortium carried out an experiment with a central bank digital currency (CBDC) issued by the Central bank of France, Banque de France, to settle government bond transactions.
France Trials CBDC for Government Bonds
The consortium was led by financial services company Euroclear, as announced by the firm in a press release on Tuesday (October 19, 2021). Other major financial companies that were part of the consortium included Crédit Agricole CIB, Agence France Trésor, Societe Generale, BNP Paribas CIB, and HSBC.
A report by the Financial Times stated that about 500 institutions participated in the CBDC trials which lasted for 10 months. During the experiment, participants settled primary and secondary market trades, securities issuance, and other related transactions using CBDC.
Also, results from the trial showed that CBDC can coexist and operate alongside the current market infrastructure. Meanwhile, multinational technology giant International Business Machines Corporation (IBM) developed the system used by the consortium for the experiment.
Commenting on the completed CBDC trial, Euroclear executive Isabelle Delorme, said:
“Together, we have been able to measure the degree to which the issuance of CBDC can offer fast and secure settlement of tokenized securities. We are well aware that there are still challenges that need to be overcome before we can envisage the implementation of blockchain platforms in production as we continue to investigate all routes to drive efficiencies for our clients.”
Banque de France first commissioned its CBDC experiment program back in March 2020, and has since conducted trials for various use cases. In July, the French central bank collaborated with the Monetary Authority of Singapore (MAS) to test the use of CBDC to settle wholesale cross-border transactions. France’s apex bank also conducted another pilot involving the use of CBDC to simulate the settlement of securities.
Ghana Working Towards Offline CBDC Functionality
Meanwhile, the Bank of Ghana (BoG) in a recent development said that it is working towards making its CBDC project, called e-cedi, to function offline. According to the BoG’s head of fintech and innovation, Kraken Oppong, the plan will benefit people who do not have access to bank accounts, electricity, and Internet connection.
Furthermore, the BoG executive said that the CBDC offline functionality will work with the use of smart cards. In August, the Ghana’s central bank partnered with German company Giesecke+Devrient (G+D) for a retail CBDC pilot in the country.
A statement by Oppong reads:
“What we hope to be able to do – and we’re one of the people pioneering this – is that the e-cedi would also be capable of being used in an offline environment through some smart cards.”
Apart from Ghana and France, many other countries are also exploring CBDCs globally. The Bank of Japan (BoJ) this October said that it would prefer a simple design for its proposed CBDC project.