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French Central Bank To Pilot Central Bank Digital Currency

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The French Central Bank is set to pilot the integration of central bank digital currency (CBDC) for interbank settlements after it selected eight candidates to participate in the experiment.

The selected candidates are Societe Generale, HSBC, Iznes, ProsperUS, Euroclear and Accenture as well as small time crypto-startups such as Seba Bank and LiquidShare.

Since the beginning of 2020, Banque de France had begun the process of experimenting with CDBC. It now aims to explore with partners the potential contributions of new technologies to improve the functioning of financial markets and more particularly interbank settlements.

To initiate the project, Banque de France successfully tested in mid-May the use of a blockchain developed by its teams to experiment with the use of a CDBC to settle a digital financial securities issue by Société Générale Forge.

Further experiments will now be carried out by the Banque de France in cooperation with the selected eight participants to test the use of a digital central bank euro in interbank settlements.

The experiments will focus on exploring new methods of exchanging financial instruments (excluding crypto-assets) for central bank money. It will also test the regulation in digital central bank money in order to improve the conditions of execution of cross-border payments and revisit the methods of making central bank money available.

The strong response to the call for applications for the experiments from finance and technology companies shows the interest in exploring the potential contributions of a digital euro issued by the central bank to improve the functioning of the financial markets, in particular interbank settlements.

The French central bank will start working with each of the eight firms over the next couple of days in order to carry out the experiments over the coming months. The digital euro is not expected for general consumer purposes, but only for interbank transactions.

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