France’s central bank has continued to actively explore the concept of a central bank digital currency (CBDC), by completing trials of a blockchain-based CBDC in the country’s debt market.

Banque de France commissioned the 10-month pilot, which saw the use of a CBDC for settling French
treasury bonds on a blockchain, using a system developed by IBM. It involved a consortium of financial institutions led by Belgium’s Euroclear and also included Agence France Trésor, BNP Paribas CIB, Crédit Agricole CIB, HSBC and Société Générale

An extended scope

As part of the trial, the participants traded government bonds and security tokens, settling them using a CBDC supplied by Banque de France. It tested use cases of a CBDC in a range of everyday activities, such as issuing new bonds, using them in repurchase agreements, and also paying coupons and redeeming deals.

“Together, we have been able to measure the degree to which the issuance of CBDC can offer fast and secure settlement of tokenised securities. said Euroclear executive Isabelle Delorme.We are well aware 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.”

Soren Mortensen, global director of financial markets at IBM, added that the project “went well beyond previous blockchain initiatives” because it successfully trialled “most central securities depository and central bank processes” while cutting off existing interim steps such as reconciliation between market intermediaries.

The trial is part of a wider Banque de France initiative launched in March 2020 to test the integration of a CBDC for the exchange and settlement of tokenised financial assets between financial intermediaries. In June this year the central bank tested a CBDC to simulate the settlement and delivery of listed securities, partnering with Swiss cryptocurrency bank SEBA.