Bank of France 1st To Successfully Test Digital Euro

  • The Banque de France’s first successful test with digital euro was carried out in collaboration with investment bank Societe Generale.
  • Though the bank did not reveal much, the test indicates that the pilot program is focusing more on the wholesale use of CBDC.
Banque de France

Banque de France. La Voix du Nord

The French central bank, Banque de France, has completed a trial of a blockchain-based digital euro as part of its ongoing experiments with CBDC, the bank said in a press release on 20 May.

According to the announcement, Banque de France used its in-house developed blockchain technology to experiment with the use of Central Bank Digital Currency (CBDC). The bank used its digital euro on 14 May, to settle an issue of digital financial securities carried out by investment bank Societe Generale.

The press release stated:

“Since the start of the year, the Banque de France has embarked on an experimental approach to central bank digital currency, aimed at exploring with partners the potential contributions of new technologies to improve the functioning of the financial markets and more particularly interbank regulations (so-called “wholesale” central bank digital currency).”

The French central bank further said that it will begin more robust testing of the technology in the coming weeks. Though not much info was released regarding the tests, they did indicate that the pilot program is focusing more on the wholesale use of CBDC, rather than retail. Where as retail CBDC’s will be open to regular consumers, a wholesale CBDC will be used mainly by banks and institutional players.

As far as we know, the only entity that is currently focused on retail CBDC implementation is the European Central Bank (ECB). During the Consensus 2020 crypto event on 11 May, an executive member of the ECB, Yves Mersch, outlined that the bank had set up a task force to look into CBDCs earlier this year, and that they are focused on retail implementation of the technology.

During his speech, he said:

“A wholesale CBDC, restricted to a limited group of financial counterparties, would be largely business as usual. However, a retail CBDC, accessible to all, would be a game changer, so a retail CBDC is now our main focus.”

The recent test was based on files Banque de France received as part of its call for applications initiative, which the bank opened on 27 March. In the coming weeks, the bank is planning to run similar tests on other software it received as part of the initiative. The bank also commented on the high number of applications it received, to test the use of a central bank digital euro in interbank regulations, saying:

“Their high number testifies to the interest of the banking and financial industry for these experiments and to the dynamism of the Place de Paris in terms of technological innovations in the financial sector.”

Discussion
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