France and Luxembourg complete CBDC experiment


The digital euro is one step closer to realisation after France and Luxembourg’s  central banks settled a €100mn digital native bond with CBDC.

In an experiment, the European Investment Bank (EIB) issued the bond in compliance with Luxembourg law, after which it used tokenised euros to settle it. 

A permissioned DLT was used to issue and register the bond, with another permissioned DLT jointly controlled by both central banks issuing experimental CBDC to cash settle all subscriptions. 

Three banks were selected to participate, with Santander, Société Générale and Goldman Sachs handling the issuing and distribution of the bonds. 

To crunch down on timing, all partners utilised a Hashed Time Lock Contract protocol to deploy a message exchange system between DLTs.

Nathalie Aufauvre, General Director, Financial Stability And Operations at Banque de France, said: “The experiment shows how digital assets can be issued, distributed and settled within the Eurozone, in a single day. 

“The Venus initiative confirms that a well-designed CBDC can play a critical role in the development of a safe tokenized financial asset space in Europe.”