Bank of France completes CBDC settlement experiment with SEBA Bank

The Banque of France announced Monday that it successfully completed an experiment with a Swiss bank to test cross-border settlements,

According to a translated release from France’s central bank, the experiment, born out of the Banque of France’s solicitation request in March, was facilitated between itself, Banque Internationale à Luxembourg, LuxCSD, and SEBA bank — a Switzerland-based bank that deals with cryptocurrencies in addition to digital and conventional assets. 

The experiment tested CBDC issuance and settlements on a public blockchain through a smart contract simulation. Specifically, the CBDCs represented listed securities designed to trigger TARGET2-Securities on its Conditional Securities Delivery feature. Though the central bank didn't' state the name of the public blockchain, it has previously used Ethereum in its experiments. 

“This experiment made it possible to demonstrate the possibilities of interaction between conventional and distributed infrastructures,” Nathalie Aufauvre, General Director of Financial Stability and Operations at the Banque de France, was quoted saying. “It also paves the way for other alliances in order to benefit from the opportunities offered by financial assets in a blockchain environment.”

As the first deputy governor of the Banque de France Denis Beau said in December 2020, there will be up to eight CBDC experiments determining the viability of such currencies and whether the French financial regulatory system must change to accommodate them. 

Experiments will continue until mid-2021, after which the Banque de France will contribute its findings to further conversations about the Eurosystem’s “more global reflection on the benefits of CBDC,” according to the Monday release.

Another experiment between the Banque of France and Switzerland’s Central Bank is to commence sometime in the near future.