France's central bank, Societe Generale 'successfully' test blockchain-based digital euro

The central bank of France has “successfully” completed the first test of its blockchain-based digital currency.

Announcing the news on Wednesday, the Banque de France said it ran the experiment with investment banking giant Societe Generale, which issued bonds as security tokens and then settled them in digital euros.

Specifically, Societe Generale issued €40 million (~$44 million) worth of covered bonds as security tokens on May 14, which were then settled in the central bank’s blockchain-based digital euros.

“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,” explained Societe Generale.

In April 2019 as well, the investment bank issued bonds worth €100 million (~$110 million) as security tokens, but those were settled in traditional euros. The latest test transaction, conducted in digital euro, “is a new step in Societe Generale scaling up in its transformation, using the most innovative technologies, with the aim of better serving its clients,” said the investment bank.

France's central bank said it will now conduct more tests with other players “in the next few weeks” as part of its ongoing experiments with digital euro.

“The results of these experiments will be an important element of the Banque de France's contribution to the more global reflection led by the Eurosystem on the interest of [a CBDC],” said the central bank.

Banque de France launched its digital euro experimental program in April. At the time, the central bank said it aims to explore the potential of digital currency in "clearing and settlement of tokenized financial assets."

Reiterating this point on Wednesday, the central bank said it is focused on “wholesale” CBDC uses cases. In April, the central bank said it is not looking to replace coins and banknotes.

The European Central Bank also once said that it is willing to issue its own digital currency if the private sector fails to make cross-border payments faster and cheaper.