France has become the latest country to use blockchain tech and digital assets for a series of government bond deals. This news is quite significant for the global crypto industry, as France’s economy is one of the world’s leading economies. The government bond deals are a part of a 10-month long experiment where the country’s biggest market participants have utilized a Banque de France-issued digital currency.
Securities depository Euroclear led the experiment, which also features some of the country’s biggest banks. Other significant participants included the country’s central bank and the public debt office. US-based company IBM developed the system that the participants used for the trials.
The Banque de France commissioned the scheme in March 2020, whose aim was to understand how digital currencies issued by the country’s central bank would work when transformed into tokens. A digital ledger would be used for recording all the transactions.
This experiment comes at a time when the skyrocketing growth and adoption of cryptocurrencies has global regulators on edge. Policymakers around the world have expressed repeated concerns about cryptocurrency issuance and payments initiatives in the private sector. Their greatest fear is that eventually, central banks will end up losing their grip on monetary policies.
Some of the biggest names to participate in the French government-backed trials include HSBC, BNP Paribas, Societe Generale, and Credit Agricole CIB. Initially, the government bonds were traded as securities tokens by the participants, which were settled with the central bank-supplied cryptocurrencies.
The experiment also attempted to understand how a central bank-issued cryptocurrency would work in terms of everyday activities like coupon payments, redeeming deals, issuing new bonds, and using the currency for repurchase agreements.