In a series of bond transactions, France has deployed digital assets, crypto assets and blockchain technology. Marking one of the most significant tests of cryptocurrencies in a major established market to date.
As part of a 10-month experiment in the country’s debt market. A group of France’s largest financial market participants used a digital currency and crypto assets created by the Banque de France.
The securities depository Euroclear was in charge of the trial, which comprised many of France’s top banks. As well as the French public debt office and the central bank and employed a technology. And it created by IBM in the United States.
The pilot was part of a project commissioned by the Banque de France in March of last year. The purpose of which is to see how central bank-issued digital currencies would exchange and settle. If they were converted into tokens and transactions recorded on a digital ledger. Deals are typically settled between parties, registered, and assets transferred to a single authority. Just like a central bank or securities depository.
It comes as worldwide authorities call on central banks to take action in the face of this year’s surge in crypto assets. Policymakers are concerned that private sector activities involving payments and cryptocurrency issuance. This could result in central banks losing control over monetary policy.
The Groups that traded Government Bonds
BNP Paribas, Crédit Agricole CIB, HSBC, and Société Générale were part of the collaboration. The groups traded government bonds as securities “tokens” and settled their trades with central bank-supplied cryptocurrencies.
The experiment put a central bank currency to the test in a variety of scenarios. Including issuing new bonds, utilizing them in repurchase agreements, and paying coupons and redeeming offers.
In both primary and secondary markets, the trial ran over 500 instructions. Euroclear refused to say how much the deals were worth.
“We have effectively measured the inherent benefits of this technology together, finding that central bank digital currencies. “I can safely and securely settle central bank money,” stated Isabelle Delorme. He is also the deputy chief executive of Euroclear France.
The Veteran Policy Maker
Last month, veteran policymaker Benoît Curé warned central banks that emerging technologies could undermine financial stability. An example of these technologies decentralized finance, which poses a danger to depository institutions and intermediaries such as banks and depositories. And also that they should act more swiftly to build official digital assets. The attempts of central banks to establish digital currencies, however, are inconsistent.
While China, Sweden, and the Bahamas have proceeded to the point of launching their own. However, major leaders in Europe and the United States have simply committed to exploring the potential of doing so.
Soren Mortensen, IBM’s worldwide director of financial markets. Remarked, “We are swiftly moving towards fundamental transformation in the post-trade market infrastructure.”
“This experiment went above and beyond prior blockchain projects because it successfully tested the most central securities depository. Also, the central bank operations while eliminating current interim steps like reconciliation between market intermediaries. ” He continued.