The Banque de France is experimenting with digital currency-based securities settlement.

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In partnership with Swiss crypto bank SEBA, the Bank of France has completed a central bank digital currency pilot for securities transactions.

The Banque de France, France’s central bank, is continuing to work on the establishment of a European central bank digital currency (CBDC).

On Monday the bank officially announced the successful completion of a CBDC experiment with major Switzerland-based cryptocurrency bank SEBA.

The experiment, which was carried out in collaboration with SEBA, Banque Internationale à Luxembourg, and the Luxembourg central securities depository LuxCSD, used a CBDC to simulate the settlement and delivery of listed securities on TARGET2-Securities (T25), a European securities settlement engine.

SEBA purchased securities from Banque Internationale à Luxembourg, with post-trade settlement managed by LuxCSD.

The newest CBDC test, according to Nathalie Aufauvre, general director of financial stability and operations at Banque de France, revealed the capabilities for traditional finance systems and distributed systems to interact. “It also paves the way for other alliances to benefit from the opportunities provided by financial assets in a blockchain environment,” Aufauvre explained.

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The latest CBDC test, according to the bank, is part of an experimental CBDC programme that began in March 2020 and intends to evaluate CBDC integration for settlements. Other studies in the programme will continue through mid-2021, as the Banque de France, together with other European central banks, evaluates the feasibility of CBDCs.

 

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