A cryptocurrency backed by the central bank could be circulating in France’s monetary system before the country hosts the Olympic games in 2024.
As leading cryptocurrency bitcoin continues past the $60,000 price level and a bitcoin futures ETF debuts in the markets, France has to be watching with eyes wide open. The country implemented a pilot program that utilized blockchain technology to facilitate bond transactions and settle them with cryptocurrencies.
The program included a who’s who in the French banking system, including BNP Paribas, Crédit Agricole CIB, HSBC, and Société Générale. The goal of the program was to test how cryptocurrencies could hold up in facilitating transactions, such as bond issuance, repurchase agreements, and other banking activities.
“We have together successfully been able to measure the inherent benefits of this technology, concluding that the central bank digital currencies can settle central bank money safely and securely,” said Isabelle Delorme, deputy chief executive of Euroclear France.
The pilot program comes after El Salvador made bitcoin an acceptable form of legal tender on September 7. Furthermore, the country got a nudge from from French policymaker Benoît Cœuré when he warned central banks that they needed to hustle and develop digital assets or get caught up in the middle of an intermediary disruption.
Moving Towards Fundamental Change
France could be one of many countries who realize that central banks must essentially adapt or die when it come to digital assets. As such, a domino effect could be forthcoming.
“We are rapidly moving towards fundamental change in the post-trade market infrastructure,” said Soren Mortensen, global director of financial markets at IBM. “This project went well beyond previous blockchain initiatives because it successfully tested most central securities depository and central bank processes whilst eliminating current interim steps, such as reconciliation between market intermediaries.”
Global adoption is already making its rounds, according to the 2021 Chainalysis Global Crypto Adoption Index. Countries like Vietnam, India, and Pakistan are atop the leader board in terms of cryptocurrency adoption.
“Our data shows that residents of more and more countries around the world are taking the dive into cryptocurrency or seeing existing adoption increase,” a Chainanalysis Insights blog post noted. “In the chart below, we applied our index methodology globally by adding up all 154 countries’ index scores — made up of the three components we describe above — for each quarter from Q2 2019 to the present.”
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