The Banque de France along with Societe Generale, an investment banking giant, has completed the first successful trial of a central bank digital currency (CBDC).
The investment bank directly registered €40 million (around $44 million) of covered bonds as security tokens on a public blockchain on May 14 and the payment settlement was made in French central bank-issued digital euro.
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In April 2019, Societe Generale also issued €100 million (around $100 million) worth security tokens, but then the settlement was made in a traditional manner using euros.
The bank highlighted that the latest trial was done using end-to-end blockchain infrastructure. It also highlighted that the decade-old technology would pave “the way for the automation and shortening of payment processes, with simplified market infrastructures and strengthened security.”
The French central bank launched its digital euro experimentation program last month and also invited organizations to participate in the blockchain trials. It also pointed out that the high number of financial firms interested in the program shows the interest and demand for the digitization of fiat currencies.
The regulator also confirmed that it will conduct more digital euro-based experiments with other players in the coming few weeks.
“The results of these experiments will be an important element of the Banque de France’s contribution to the more global reflection led by the Eurosystem on the interest of an MDBC,” the central bank stated.
Digital currency is a priority
When most of the top global central banks are checking the feasibility of issuing a digital currency, China has already started pilot programs with its digital yuan in multiple cities.
Along with the French monetary regulator, its Dutch counterpart is also seeking to take a leadership role in the development of digital euro.
However, many experts are still critical about the impact of digital fiat currency on the existing monetary system.