Today the Banque de France announced the results of a central bank digital currency (CBDC) transaction conducted on December 17. It involved the subscription and redemption of fund units on IZNES’ private blockchain. IZNES is the French fund administration platform developed by SETL that uses SETL’s enterprise blockchain technology.
Last March, the central bank announced it would run a series of wholesale CBDC trials with eight organizations, and IZNES was one of those. Given the experiments’ wholesale nature, the primary use cases are for capital markets or trading transactions. The advantage is that having a digital currency on a blockchain enables instant settlement, and in the case of fund unit tokens, delivery versus payment.
IZNES created a consortium which, apart from SETL, includes SETL’s investor Citigroup, Caceis, consultants DXC, Groupama Asset Management and OFI Asset Management.
Smart contracts were used to enable the BdF to issue and control the circulation of the digital euro tokens which amounted to just over €2 million ($2.4 million).
The central bank was previously involved in a wholesale CBDC trial with Société Générale SFH where wholesale CBDC was used to settle covered bonds on a public blockchain.
A distinguishing aspect of these trials is all the transactions are pilots. In other words, they are all real transactions. They also need to be conducted according to current legislation. That presents a challenge because only certain types of companies have access to central bank money. Hence the bank is exploring whether non-banks should be allowed access.
The French central bank expects to report on the trials with the eight companies around the middle of 2021. It is one of several national central banks that plans to feedback input to the European Central Bank’s explorations.