CBDCs (Central Bank Digital Currencies) have certainly gained plenty of popularity as of late, as multiple countries scramble to join in and have their respective currency be digitalized. As of the time of this writing, China seems to be the one leading the pack when it does come to CBDCs, although other nations have made a bit more progress in terms of actually launching their CBDCs, as is the case with The Bahamas and its ‘Sand Dollar’.
With this in mind, various financial institutions in Europe are thus utilizing pilots in an effort to hopefully make a viable case for introducing the digital euro. To this end, a digital bond worth 100 million euros had been issued through the European Investment Bank earlier on in the week, and it has now become common knowledge that this was in fact a trial of sorts meant to pilot the launch of a European CBDC. An announcement from Banque de France, the central bank of France, on the 28th of April confirmed this when it had revealed that a blockchain-based CBDC was indeed used to settle the abovementioned digital bond.
The entire thing was an experiment
Banque de France stated that if we were to observe things from a technological perspective, then we would notice that the experiment needed both the development and subsequent deployment of secure smart contracts. This needed to happen in order for the bank to be able to issue and then control the CBDC token circulation and to ensure that the CBDC transfer had taken place at the same time as various securities tokens were being delivered to the portfolios of the investors.
In related news, Banque de France also stated that the long-term goal is to give evidence of a potential use case for the European CBDC, and so more experiments will need to be conducted in the near future. Various other uses of CBDC for interbank settlements will also need to be assessed, the bank added.
Still, a long way to go for European CBDC
Despite the bank’s best efforts, it may nevertheless be a long time till the digital euro can be successfully launched. Christine Lagarde, the European Central Bank’s President, stated that hopefully, the launch will not take longer than the maximum of 5 years, but it is still important to ensure the safety of the CBDC first.
Things will certainly need to be sped up if Europe wants to catch up with the rest of the world in terms of CBDCs. Monica Singer (South Africa’s representative) claimed that Europe risks being left behind if it takes too long.