Experimental CBDC Used by France and Luxembourg to Settle a Bond Issue

Vignesh Karunanidhi
Federal Reserve to Take 'Slow and Steady' Approach to CBDC, Says RBC
Source: The Economic Times

Global central banks are paying intense attention to the concept of CBDCs. Central Bank Digital Currencies, or CBDCs, are anticipated to coexist with traditional cryptocurrencies, which are significantly more volatile than their centralized, “less-risky,” counterparts. Many people also believe that not all cryptocurrencies will be replaced by CBDCs.

However, global nations have been experimenting with CBDCs to test their real-life use cases and their usage in other settlements. France and its neighboring country, Luxembourg, have participated in the most recent series of trials in tokenized financial markets.

France and Luxembourg used CBDCs to settle 100M Euros bond

Luxembourg and France used Central Bank Digital Currency to settle a 100 million euro bond. The initiative, tagged “Venus”, is a prime example of how digital assets can be issued, distributed, and settled within the eurozone in a single day. It is also an affirmation that a well-designed CBDC can help in developing a safe, tokenized asset space in the country, as stated by Nathalie Aufauvre, general director at Banc de France.

“The Venus initiative consisted in a 100 million euro digital native bond issuance by the European Investment Bank under Luxembourg law, and was settled using a tokenized representation of euro central bank money,” the statement reads.

Nicolas Weber, the executive director of payment systems at the Banque centrale du Luxembourg, also stated that this initiative is answering the question of one possible cross-border payment interest from the market to perform “digital native securities settlement with a Central Bank Money token.”