A unique venture to employ inter-bank digital currency for settlement of security token dealings was rolled out last week.
The association comprises of institutional division of three French banks namely BNP Paribas CIB, Caisse des Dépôts and Crédit Agricole CIB, security token platform Tokeny and French tech firm The Blockchain Xdev.
The venture has some parallels to Fnality, which is establishing an interbank payment network. That venture began in 2016 and is supported by 14 international banks and Nasdaq, but is waiting for the nod from the central bank.
The French group intends to study real-time atomic settlement or DVP (delivery versus payment) system. That is for a token used for settlement of transactions on a licensed securities exchange that capitalizes on distributed ledger or blockchain technology.
The group intends to confirm to relevant regulations. It should be noted that a multibank settlement token has to comply with the Financial Market Infrastructure (FMI) rules.
The most important message is that the banks can’t anticipate several wholesale central bank digital currency (CBDC) to become a reality in the foreseeable future. As members of the Liquidshare Group, all three banks partake in the wholesale CBDC piloting program carried out by Banque de France.
Overall there are eight kinds of French trials and a consortium has been established by each of them with Liquidshare being one among them. Additionally, Euronext is a common shareholder of both Liquidshare and Tokeny.
It would take many years for the project to go live, even if the European Central Banks approves the wholesale central bank digital currency (CBDC) venture. The US dollar is the base currency for settlement of a majority of derivatives and securities dealings, and the probability of a wholesale CBDC is minimal.
Eventually, the group intends to create a capacity for settlement of several currencies. Another objective is to trial compatibility with several private and public blockchains, in addition to regulatory features.
To begin with, the aim is to utilize Ethereum and Tezos blockchain. There was no mention about the consortium, but as a developer of Fragmos Chain, the Blockchain Xdev also has adequate work experience with R3’s Corda. Fragmost Chain offers post-trade settlement application for OTC derivatives.
The group is inviting European and global participants to take part in the venture, which is scheduled to go live next year.
