The Bank of France has successfully completed an experiment involving the use of CBDC to settle listed securities. The test was carried out with the help of a partner alliance led by SEBA Bank, a digital asset bank provider located in the Swiss Crypto Valley.
Central bank and crypto company conduct successful CBDC test
The Bank of France announced in a press release issued on Monday that as part of a plan launched in March 2020, the Central Bank Digital Currency (CBDC) has been used to simulate the settlement of listed securities. On June 18, the regulator simulated the issuance of CBDC tokens on the public blockchain while maintaining control of transactions.
The bank explained that it developed and deployed a dedicated smart contract and used Target2-Securities (T2S) of the euro system as a delivery platform. All businesses are carried out in cooperation with Swiss-licensed digital asset banking provider SEBA Bank AG, Luxembourg International Bank (the oldest multi-business bank in the Grand Duchy) and the central securities depository service LuxCSD.
SEBA explained in another announcement that the confidentiality of processing transactions is achieved through a protocol that uses zero-knowledge proofs to encrypt and hide the value of CBDC transactions on the public blockchain. Cryptobank pointed out that participants successfully demonstrated the ability of distributed ledger technology to communicate with T2S to settle listed securities.
Nathalie Aufauvre, BOF’s Director of Financial Stability and Operations, pointed out that the experiment has demonstrated the possibilities revealed by the interaction between traditional infrastructure and distributed infrastructure. She emphasized that the test paved the way for other alliances that aim to take advantage of the opportunities provided by financial assets in the blockchain environment.
Bank of France continues to conduct more CBDC trials
The Bank of France added that other tests planned as part of the current plan will continue until mid-2021. Its Swiss partner concluded: “The success of this experiment will be an important factor in the euro system’s global reflection on the benefits of CBDC and blockchain technology to improve transaction payment and settlement.”
“We are very pleased to successfully complete this experiment with Bank of France and use SEBA Bank’s institutional digital asset platform infrastructure to support this important development of Bank of France and contribute to the possibility of digital European currency,” Said Matthew Alexander, head of digital corporate finance at SEBA Bank in Zug.
The European Central Bank (ECB) has deepened its analysis this year on whether and how to digitize the common euro area currency, and its management committee is expected to decide on a possible digital euro at its July meeting. The European Central Bank recently released an assessment report on the international role of the euro. The bank pointed out that digital currencies may enhance the global appeal of European currencies.
Earlier this month, the Bank of France and the Swiss National Bank announced cooperation with the Bank for International Settlements Innovation Center to trial wholesale central bank digital currencies in cross-border clearing. The test will be conducted with the support of a private sector consortium led by Accenture, which also includes Credit Suisse, Natixis, R3, SIX Digital Exchange and UBS.
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