Earlier this month, the Banque de France partnered with Banque Centrale de Tunisie for France’s seventh central bank digital currency (CBDC) experiment. The trial involved a consortium led by Prosperus comprising Bank Wormser Frères, la Banque Internationale Arabe de Tunisie and its French subsidiary BIAT France.
The experiment used a blockchain-based wholesale central bank digital currency to carry out wire transfers between commercial banks in each country instead of using SWIFT.
The primary motivation behind this wholesale CBDC trial was to find a way of making commercial cross-border transfers real-time, more transparent and cost-effective. Particularly for Tunisians who live and work in France sending digital Euros to Tunisia.
“This operation constitutes the first use case of wholesale CBDC as a means to operate retail transfers and paves the way for further studies between central banks to improve remittances,” said Nathalie Aufauvre, General Director of Financial Stability and Operations at Banque de France.
Prosperus provided InstaClear, a private distributed ledger that was used for the transaction. The startup has been working with the Tunisian central bank since March 2020 to create a shared system that enables cross border payments between North African banks using the central banks as intermediaries. Tunisia intends InstaClear for use by the Arab Maghreb Union, which consists of Morocco, Algeria, Tunisia, Libya and Mauritania. The ultimate aim is to enable North African commercial banks to make transactions via the system. While the Bank of Libya was not a participant in this trial, the central bank is also a client of Prosperus.
One of several cross border CBDC trials
The Bank for International Settlements (BIS) is encouraging central banks to take account of cross border payments at the CBDC design phase. Hence CBDCs have to interoperate with digital currencies from other countries and the design of multi-CBDC (m-CBDC) systems is an active research area.
France’s recent CBDC trials have all focused on cross border payments. On July 8, the French central bank announced a cross border CBDC experiment with the Monetary Authority of Singapore (MAS), using JP Morgan’s Onyx blockchain to support the wholesale CBDC experiment. And last month, France partnered with the Swiss National Bank to investigate the use of wholesale CBDC to settle tokenized asset transactions.