Following the release of The Bahamian “Sand Dollar” CBDC about a year ago, China is moving quickly with its own e-CNY program. Other countries, predictably, are feeling the pinch.
Nonetheless, after months of quiet preparation, one major European player is now definitively in the race.
Keep an eye out!
During a 10-month trial, the country’s “largest financial market participants” used a CBDC provided by the Banque de France. Euroclear, a financial company based in Belgium that specializes in the settlement of securities transactions, led the program.
According to a press release issued by Euroclear, the participating members included the Banque de France, Agence France Trésor, BNP Paribas CIB, Crédit Agricole CIB, HSBC, and Societe Generale. Meanwhile, IBM provided technological assistance as well as features such as “advanced privacy-preserving tokens and hybrid cloud capabilities.”
A larger program to create a French CBDC is said to have begun in March 2020 at the request of the Banque de France. However, the purpose of this trial was to evaluate the utility of CBDCs and blockchain technology, as well as to see if tokenized securities could be settled quickly and safely.
To that end, nearly 500 test cases were run, with French government bonds – or French sovereign debt securities, to be precise – serving as the assets. Meanwhile, banks experimented with being market participants and custodians.
According to Soren Mortensen, IBM’s Global Director of Financial Markets,
“This project went far beyond previous blockchain initiatives in that it successfully tested most central securities depository and central bank processes while eliminating current intermediate steps such as reconciliation between market intermediaries.”
Putting a new spin on ‘Monet’
Euroclear stated in an insights report that the technology was “suitable to manage post-trade market operations in CBDC…” However, the company emphasized the importance of conducting more tests with higher transaction volumes in order to enable scalability.
According to the report,
“Several challenges remain before we can implement a blockchain platform in a true production environment, including the maturity of the technology itself, the management of distributed ledger platforms, and interoperability with other platforms.”
Who will come out on top in the CBDC race?
Kristalina Georgieva, Managing Director of the International Monetary Fund, spoke about crypto, stablecoins, and digital currency in early October. She revealed that, according to an IMF survey of its members, approximately 110 countries were at various stages of investigating CBDCs.
Georgieva stated that things were moving “quite quickly,” but that there was only one CBDC in existence: the Sand Dollar of the Bahamas. She was still concerned about interoperability, trust, and stability.
At the time of writing, France had 11 Bitcoin ATMs/tellers. Belgium, on the other hand, had 53.