The central bank in France has announced a successful test of a proposed central bank digital currency (CBDC), becoming the latest nation to run pilot demonstrations of sovereign virtual currencies.
With the initial test completed, the Banque de France says it has more experiments to conduct with the digital euro involving interbank settlement protocols.
Meanwhile, China continues to be the clear leader in the race for supremacy in the CBDC arena with its proposed DC/EP currency already been trialed in different cities across the country. Facebook’s Libra project is also looking to get off the ground with more members joining the Libra Association while the payment platform undergoes operational changes targeted at smoothening regulatory wrinkles.
France’s Central Bank Tests Proposed Digital Euro
The Banque de France announced the news of the successful test of the CBDC via a communique published on Tuesday (May 20, 2020). According to the press release, the French central bank tested the CBDC in the settlement of digital financial securities issued by Société Générale Forge.
Reports indicate Société Générale issued about $44 million in security tokens back on May 14. The Bank de France using its in-house blockchain infrastructure settled the issuance of the covered bonds using digital euros.
An excerpt from a statement issued by Société Générale explaining the process reads:
“This experimentation was performed end-to-end using blockchain infrastructures…It demonstrates the feasibility of financial securities being digitally settled and delivered in Central Bank Digital Currency (CBDC) for interbank settlements.”
Back in December 2019, Blockonomi reported that France had plans for central bank digital currency trials in 2020. According to the communique, the country’s central bank will hold other tests to determine the suitability of the proposed CBDC.
This next round of trials will utilize the digital euro in interbank settlements. The French central bank also wants to see how participants in the legacy finance arena interact with a sovereign digital currency.
France’s Becoming More Crypto-Friendly
France has been vocal in its calls for the European Union (EU) to consider the creation of a digital euro for the region. Like was the case for robust crypto regulations, it appears the authorities in France are not waiting for the EU to chart a course forward.
In its communique, the French central bank described the CBDC tests as its contribution to any EU-led CBDC project. The country is also one of the major economies opposed to Facebook’s Libra digital payments project.
The CBDC tests also constitute another example of France’s growing appreciation for cryptocurrencies. Back in early March, a French court ruled Bitcoin (BTC) as being a currency. The country’s Finance Minister also removed taxes on gains from crypto-to-crypto trades in September 2019.
CBDC Race Still Ongoing
The French CBDC test comes even as China is already in an advanced testing stage of its proposed sovereign digital payment system. As previously reported by Blockonomi, wallets for China’s DC/EP are already available in four cities with each city working on a unique use case. Major restaurants and fast food outlets like McDonald’s’, Starbucks, and Subway have also been invited to participate in the DC/EP trial run.
Even countries like South Korea and the United States that are not actively developing a CBDC have issued statements indicating their intention to study the merits of creating their own sovereign digital currencies. In February, the U.S. Federal Reserve Chairman revealed that the country was working hard on a digital currency project.