Banque de France is testing digital currency-based securities payments

The French central bank – Banque de France – continues work on the development of a digital currency for the European Central Bank (CBDC).

On Monday, the bank officially announced the successful completion of a CBDC study with the large Swiss crypto bank SEBA.

The study was carried out in collaboration with SEBA, Banque Internationale à Luxembourg and Luxembourg securities depository LuxCSD and uses CBDCs to simulate the settlement and distribution of securities listed on TARGET2-Securities (T25), a European securities settlement instrument .

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

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Nathalie Aufauvre, General Manager of Financial Stability and Operations at Banque de France, said the latest CBDC study showed the interoperability of conventional and distributed financial systems. “It also paves the way for other alliances to take advantage of the opportunities that financial investments offer in a blockchain environment,” said Aufauvre.

The bank notes that the new CBDC study is part of an experimental CBDC program launched in March 2020 that aims to test the possibility of CBDC integration for settlements. Further testing of the program will continue until mid-2021, when the Banque de France, alongside other central banks in Europe, tests the viability of CBDCs.