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France’s central bank successfully tests CBDC with T2S platform

Banque Internationale à Luxembourg, LuxCSD and Seba Bank tested use of Central Bank Digital Currency (CBDC) for securities transactions.

By Jonathan Watkins
Banque de France has successfully used Central Bank Digital Currency (CBDC) in a test environment, in connection with TARGET2-Securities (T2S). 
 
SEBA Bank purchased securities from Banque Internationale à Luxembourg, while post-trade settlement was handled by LuxCSD, the Luxembourg central securities depository. 
 
The transaction was carried out through the Conditional Securities Delivery functionality (CoSD) already existing in T2S, which makes the booking of securities dependent on the success of an event external to the European Central Bank settlement platform. 
 
Banque de France simulated CBDC tokens on a public blockchain, while preserving confidentiality of the transactions. As soon as the tokens were successfully transferred from SEBA Bank to Banque Internationale à Luxembourg, LuxCSD delivered the securities in T2S. 
 
“Connecting new technology, such as DLT, with existing infrastructure is crucial to offer optimal services for the market,” said Marco Caligaris, chief executive officer at LuxCSD. “By joining forces, the industry can develop sustainable solutions that not only work today but lay a strong foundation for the future. Being a trusted central securities depository at the heart of one of Europe’s financial centres, LuxCSD is perfectly positioned to support the industry on its way towards a true digital finance ecosystem.” 
 
This test has been one of many conducted by Banque de France to explore design options for the technical implementation of a digital euro at the level of the back-end infrastructure and end-user access solutions.  
 
Earlier this year the French central bank completed a CBDC transaction in collaboration with Citi, CACEIS, Groupama Asset Management, OFI Asset Management, and DXC Technology, whereby tokens were used to subscribe to a fund and represented the world’s first successful live settlement of a fund using CBDC tokens. 
 
Banque de France has been working on the possible issuance of a digital euro – an electronic form of central bank money accessible to all citizens and firms, alongside cash.

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