Banque de France tests blockchain for central bank digital currency

On May 14, the Bank of France performed a first test with the Societe Generale Forge on a blockchain developed in-house. This test is part of an approach to experimenting with wholesale central bank digital money (CDBC).

The Banque de France experiments in the area of ​​central bank digital money (CDBC) have taken a new step. A first test was thus carried out in partnership with a banking player, Societe Generale Forge.

The BdF indeed indicates having carried out, "successfully", a test on May 14. The central bank therefore relied on a private blockchain developed by its teams. This blockchain is therefore used specifically for the use of a central bank digital currency

Great interest in the banking industry for a wholesale CDBC

The experiment carried out in May consisted in "settling an issue of digital financial securities carried out by Société Générale Forge" specifies the Banque de France. More tests will follow in the coming weeks.

The BdF indeed announces future experiments "in cooperation with other actors. These life-size tests follow the call for applications opened on March 27, 2020 to "test the use of a digital central bank euro in interbank regulations. "

The central bank indeed stresses carrying out works exclusively around a "big" CDBC. It differs from a digital retail currency, that is to say also accessible to individuals.

A retail CDBC is also under study within the ECB, very recently recalled Yves Mersch, member of the executive board of the central bank. “A retail CBDC, accessible to all, would be a game changer. This is why we are now focusing on a digital retail central bank currency, "he said.

There is nothing magical about central bank money

The priority in France is therefore the valuation of a wholesale digital currency. The Banque de France considers important the interest of "the banking and financial industry for these experiments. "

It also insists on the "dynamism of the Place de Paris in terms of technological innovations in the financial sector. In another blog post, however, the BoD wants to balance expectations for the central bank currency.

"There is nothing magical about central bank money," she says. The Bank thus recalls that digital or not, the currency does not allow to get rid of the issuance of public debt or to extinguish the existing debt. "No easy option will escape the financing of budget deficits," warn economists.