France has emerged as a powerhouse in Europe as far as Central Bank Digital Currency (CBDC) development is concerned. After announcing a breakthrough with its digital Euro last year, the Banque du France hasn’t looked back.
Full Steam Ahead
In the French Central Bank’s latest move towards a digitized currency, it recently completed what appears to be the first pilot program for the asset. The bank recently announced that it had successfully applied the CBDC in a transaction, setting the stage for additional tests and possibly, implementation.
According to the central bank’s announcement, it launched the pilot for its CBDC on December 17, 2020. The test included the sale of stimulated shares worth 2 million euros ($2.4 million), all of which were cleared using the CBDC.
The central bank’s test was run on a platform provided by U.K.-based blockchain services provider SETL.
Along with providing the underlying blockchain, SETL also handled the CBDC stablecoin and used its IZNEZ record-keeping platform to track fund unit movements.
The test focused on shares of Groupama Enterprises, a money market fund, which were subscribed and redeemed using France’s proposed CBDC.
Other participants in the trial included local banking giant CACEIS Bank and Citibank. Both had purchased units of the CBDC, although CACEIS Bank acted as a custodian for the asset.
The French Inspiration
While there is still no timeline for a launch, France has been working significantly to develop and test its CBDC. In May, the bank confirmed that it had successfully completed the first test of its CBDC, following a call for new technology that would back the asset. As the announcement read, the bank tested a securities sale with the CBDC. Success with the initiative had given it the confidence to move forward with additional tests.
The French Central Bank has been clear about its objectives for this CBDC, explaining in a document last November that the asset will primarily focus on improving interbank settlements and providing wholesale financial services.
France is now leading what could be a European push for a more digital future. Spurred by its successes, the country’s government is now pushing for accelerated testing of a continent-wide digital asset from the European Central Bank (ECB)
Other European countries also appear to be taking their lead and branching out with their separate CBDC projects. Earlier this month, the Italian Banking Association (IBA) confirmed that it would begin studies on its own digital Euro project too.
As the announcement explained, the banking association will work with ABI Lab, its research and development arm, as well as local commercial banks, to develop the experimental CBDC. The study will focus primarily on technical feasibility analysis and the asset’s programmability, creating a distinction from the current electronic payment protocols.