- Digital euro comes one step closer after Banque de France and Société Générale complete successful test
- Banque de France has teamed up with a number of collaborators
- Euro nations may not have the legal right to mint the coins
A digital euro may become a reality sooner rather than later following an announcement from Banque de France that it has completed a test of a euro stablecoin with a subsidiary of Société Générale. The test follows the stated desire of the bank’s governor, Villeroy de Galhau, for the European Central Bank (ECB) to be the first to issue a wholesale CBDC.
Société Générale First to Cross the Line
Banque de France unveiled plans to test a central bank digital currency (CBDC) in March, saying at the time that 10 applicants would be selected to participate. This strategy seems to have paid off, as Banque de France and Société Générale shrugged off coronavirus restrictions to successfully test a version of what could end up being a digital euro.
Galhau’s desire to be the first to issue a digital euro dates back to last year, where he told French financial newspaper Les Echos that he saw “a certain interest to move quickly on the issue of at least a wholesale MDBC (CBDC) to be the first issuer at the international level”. This desire has manifested itself in swift action, with a press release published Wednesday proclaiming the breakthrough:
…the Banque de France has just successfully tested on May 14 the use of a blockchain developed by its teams to experiment with the use of a central bank digital currency in order to settle an issue of digital financial securities carried out by Société Générale Forge.
The press release added that “other experiments will be conducted by the Banque de France in cooperation with other actors”, offering the potential for more solutions to come the way of the French financial sector in the race for a feasible digital euro.
Legal Troubles May Scupper Plans
Banque de France may face legal problems however after ECB board member Yves Mersch told Consensus: Distributed last week that it is unclear whether the ECB has the exclusive right to issue a CBDC, due to the fact that nations have the legal right to issue physical euro coins but not notes. This leads to the as yet unresolved question of whether it would be legal for nations to issue a digital version of those physical coins.