The Banque de France presented the results of experiments that focused on settlements with tokenized securities and international transfers using the digital euro.
According to a report published by the Banque de France, nine experiments with the digital euro were carried out, and seven of them were successfully completed by November 8, 2021. The regulator tested the digital currency of the Central Bank using platforms based on public and private blockchains, as well as using distributed ledger technology (DLT).
It turned out that the digital currency of the Central Bank can function effectively using different blockchains and contribute to the safe development of tokenized financial markets while maintaining the key role of the digital currency of central banks.
The Banque de France concluded that the tokenization of securities would provide transparent tracking of transactions and speed up settlements. In addition, it will facilitate structured finance as well as trades in small-cap bonds and OTC products.
DLT and tokenized assets can also reduce associated risks and reduce the number of counterparties. At the same time, the Banque de France argues that the use of cryptoassets or stablecoins as a settlement asset implies regulatory and financial risks, despite attempts by international regulators to control the cryptocurrency industry.
The Central Bank of France began experimenting with the digital euro last year. Nathalie Aufauvre, Director of Financial Stability and Operations at the Bank of France, commented on the initiative:
“Testing of the wholesale digital euro was carried out in record time, in less than a year. Tokenized financial assets, when combined with a central bank’s digital currency, can provide secure settlements and promote the safe development of innovation. Wholesale government stablecoins will improve the efficiency of cross-border payments, ”said Ofovr.
The Swiss National Bank also took part in testing the state digital currency, and in July the investment bank BNP Paribas and the Euroclear settlement center joined the Bank of France initiative.
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