Home News 100M euro digital bond was a CBDC test, says Bank of France

100M euro digital bond was a CBDC test, says Bank of France


The Central Bank of France tested the national digital currency. The regulator conducted an experiment with securities issued by the European Investment Bank on the Ethereum blockchain. The European Investment Bank is a public financial and credit institution of the European Union. The authorized capital of which is formed at the expense of contributions from the member countries of the association. The deals for the sale of securities were managed by the banks Goldman Sachs, Banco Santander and Societe Generale.

In 2018, Banco Santander became one of the members of a consortium of Spanish banks, which implemented a pilot blockchain project to issue warrants.

Likewise, in April 2021 Societe Generale released the first structured product in the form of security tokens on the Tezos public blockchain.

Earlier, the Bundesbank tested a blockchain settlement solution independent of CBDC.

The Banque de France settled digital bonds issued by the European Investment Bank on the Ethereum blockchain in the national digital currency (CBDC). According to the regulator, this was technically implemented by creating smart contracts on the blockchain to issue and control the circulation of digital euro tokens.

The transfer of CBDC occurred concurrently with the delivery of digital securities to the bank and investor portfolios. So, in the coming months, the Banque de France plans to conduct additional experiments. To evaluate other uses of the national digital currency in interbank settlements.

More and more banks issue blockchain-backed bonds

The European Investment Bank (EIB), the lending arm of the European Union, used Ethereum technology for the first time. To issue a two-year digital bond worth € 100 million.

The EIB said the transaction is a series of bond tokens on the blockchain, where investors buy and pay for security tokens using traditional fiat money. According to a Bloomberg report, the bonds have a zero coupon and will be registered on the blockchain.

The number of banks joining the blockchain-backed bond club is constantly increasing. The Bank of Thailand reportedly launched a blockchain-backed platform for issuing government savings bonds in September.

In November, China Construction Bank leveraged Labuan-based digital asset exchange Fusang to issue $ 3 billion in debt securities via blockchain.

We will also remind that in April China announced active work on the digital national currency. The People’s Bank of China is already introducing the digital yuan. It is possible that foreigners will be able to use it by 2022.

However, the European digital currency will appear only when officials are fully confident that it is necessary to “ensure the stability of the currency”. The final choice of the CBDC model is not just a technical issue; it will have a major impact on policy and financial regulation in the Eurozone.

Ethereum price skyrockets after the bond placement

Ethereum rate, the second most popular cryptocurrency in the world after Bitcoin, hit a record $ 2,800 during trading on Thursday after the EIB issued digital bonds.

Therefore,experts note that the news of the EIB’s digital bond issue prompted institutional investors to buy the token. They also noted decrease in the supply of Ethereum in the market, which led to an increase in its price.

Since the beginning of this year, this cryptocurrency has risen in price by more than 3.5 times. After a jump of 5.7 times at the end of 2020, Trading Economics notes.

Meanwhile, Bitcoin on Thursday fell in price by 1.3% – to $ 53.77 thousand.

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