In recent years, Ethereum development studio ConsenSys has made it one of its foremost goals to formally bring central bank digital currency (CBDC) projects into the fold of Ethereum’s ecosystem. Now, the mission’s more in reach than ever.
That’s because this week we saw ConsenSys selected as a CBDC technology partner by not one but two major banks: the digital markets arm of French investment bank and financial services powerhouse Société Générale (SocGen) and the Bank of Thailand, the central bank of Asia’s 11th-largest economy.
These high-profile developments come after the dev studio has published extensive resources — like case studies, videos, webinars, whitepapers, and more — on why blockchain-based CBDCs and specifically Ethereum-based CBDCs make a lot of sense in the public and private sectors going forward.
Alas, all the hard work’s paying off and perhaps leading to the future of payments of in general.
SocGen Has Experiments, ConsenSys the Expertise
On Wednesday, Oct. 28th, ConsenSys and SocGen – Forge — the digital capital markets division of the bank — jointly announced their new Ethereum-centric partnership as part of the bank’s “ongoing Central Bank Digital Currency (CBDC) pilot activities.”
Indeed, SocGen’s generally no stranger to Ethereum or CBDC ventures. Last year the bank issued €100 million worth of security tokens atop Ethereum, while earlier this year the institution helped the Banque de France complete a CBDC settlement trial, in which SocGen security tokens were settled with an experimental digital euro.
Going forward, then, ConsenSys will supply SocGen – Forge with “technology and expertise” around CBDC matters like cross-ledger interoperability and beyond.
“We are pleased to partner with ConsenSys, a company who is a key player in the development of distributed ledger technology globally and offers many of the infrastructure and development tools used by the blockchain community,” Jean-Marc Stenger, CEO of Societe Generale – Forge, said of the collaboration.
Helping Thailand’s Central Bank, Too
On Oct. 28th, ConsenSys also announced that it had joined the Bank of Thailand on a CBDC proof-of-concept project that will rely on Hypledger Besu, an enterprise-friendly Ethereum client developed by ConsenSys startup PegaSys.
The POC will make use of popular ConsenSys products like MetaMask and Codefi and be specifically designed for retail use cases, the studio’s press release noted:
“One of the business cases will test the use of a CBDC to simulate daily commerce, automate payments, and support procurement and financial management system called Procure-to-Pay (B2P) … In the exploration, CBDC will be tested and issued using [Ethereum-based] ERC20 smart contracts, which is the most adopted token standard worldwide.”
To this end, the news is certainly a boon for Ethereum, as it shows that this alternative global financial system has extensive utility and room for mainstream growth. And conversely this partnership is good news for Thailand, as the country’s economic leadership will be ahead of most of the world when it comes to Ethereum-based CBDCs, which now seem all but poised to proliferate from here.
Why Ethereum for CBDCs?
On ConsenSys’s CBDC resource page, the studio outlines its case for why Ethereum is excellent infrastructure for state-backed digital currency, boiling down the network’s viability to things like data availability, programmability, and system trust.
For example, an Ethereum-powered CBDC can guarantee “data availability and resilience” and in transparent fashion. Such an instrument would also be highly programmable, meaning central banks could bake compliance rules right into their currencies. And this kind of CBDC would also foster an environment of trust, as it can be received and used privately without intermediaries.
All that said, Ethereum’s currently the leading blockchain ecosystem and the foremost smart contracts platform. The CBDC rat race is certainly Ethereum’s race to lose for the foreseeable future.