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France has used digital assets and blockchain technology in a series of bond transactions, marking one of the most significant trials to date of cryptocurrencies in a leading established market.
A consortium of France’s biggest financial market participants utilised a digital currency issued by the Banque de France as part of the 10-month experiment in the country’s debt market. The trial was led by the securities depository Euroclear and included many of France’s largest banks, as well as the French public debt office and the central bank, and used a system developed by US-based IBM.
The pilot was part of a scheme commissioned by the Banque de France in March last year to explore how central bank-issued digital currencies would exchange and settle if they had been turned into tokens, with deals recorded on a digital ledger.Typically deals are reconciled between parties, recorded and assets transferred at a single authority such as a central bank or securities depository.
It comes as global regulators are urging central banks to act in the face of the growth in crypto assets this year. Policymakers are worried that private sector initiatives around payments and cryptocurrency issuance could lead to central banks losing control of monetary policy.
The consortium included BNP Paribas, Crédit Agricole CIB, HSBC, and Société Générale. The groups traded the government bonds as securities “tokens” and settled them with cryptocurrencies supplied by the central bank. The project tested the usefulness of a central bank currency on a range of everyday activities, such as issuing new bonds, using them in repurchase agreements, as well as paying coupons and redeeming deals....
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