{"id":9404,"date":"2024-12-23T12:21:50","date_gmt":"2024-12-23T10:21:50","guid":{"rendered":"https:\/\/iznes.io\/?p=9404"},"modified":"2024-12-23T12:21:50","modified_gmt":"2024-12-23T10:21:50","slug":"dlt-settlement-in-central-bank-money-by-iznes-with-eurosystem","status":"publish","type":"post","link":"https:\/\/iznes.io\/en\/2024\/12\/23\/dlt-settlement-in-central-bank-money-by-iznes-with-eurosystem\/","title":{"rendered":"Groundbreaking Experimentation of DLT Settlement in Central Bank Money by IZNES with the European Central Bank and Banque de France"},"content":{"rendered":"

\"DIGITAL-CENTRAL-BANK-MONEY-EXPERIMENTATIONS-BY-IZNES-FOR-BANQUE-DE-FRANCE-EUROSYSTEM\"<\/strong><\/p>\n

Paris, 23\/12\/2024<\/strong> \u2013 In a landmark initiative, IZNES, in collaboration with AXA Investment Managers (AXA IM), BNP Paribas, Generali, OFI Invest Asset Management, Societe Generale and Societe Generale-FORGE and under the aegis of the Eurosystem\u2014comprising the Banque de France (BdF) and the European Central Bank (ECB)\u2014has successfully conducted an innovative experiment exploring the potential wholesale Central Bank Money (CeBM), within financial market operations on three interoperable blockchains.<\/p>\n

IZNES CEO Christophe Lepitre<\/strong> stated, \u201cThis groundbreaking initiative underscores IZNES’s commitment to innovation and collaboration, paving the way for future advancements in digital finance. It concretely demonstrates that interoperability between blockchains\u2014often perceived as a major obstacle to the adoption of DLT technologies in finance\u2014is not only possible but also holds immense potential to transform our financial infrastructures.\u201d<\/p>\n

The experimentation utilized the DL3S platform operated by the Banque de France under the aegis of the ECB, proving that wholesale CeBM can be used for conducting Delivery versus Payment (DVP)<\/strong> of fund units on three interoperable platforms: DL3S, IZNES and Societe Generale-FORGE.<\/p>\n

Innovative Technology in Action<\/strong><\/p>\n

To facilitate the DVP process, a Hash Time Locked Contract (HTLC)<\/strong> was issued on the DL3S blockchain and seamlessly exchanged with the IZNES blockchain. The HTLC technology introduced a layer of cryptographic security, requiring recipients to produce cryptographic proof of payment within a specified timeframe. Failing this, the funds would be returned to the payer, ensuring operational integrity and trust.<\/p>\n

\u201cBy leveraging the HTLC mechanism, we showcased the seamless interoperability between the DL3S, IZNES and Societe Generale-FORGE platforms, proving that wholesale CeBM can play a transformative role in financial market infrastructures,\u201d stated Bhavesh Senedhun<\/strong>, experiment leader, Director General and CIO of IZNES.<\/p>\n

Jean-Robert Hervy<\/strong>, Director General and CPO of IZNES, emphasized: \u201cThis experiment represents a step forward in demonstrating the feasibility and efficiency of using digital cash tokens in complex financial operations. By leveraging a secure, digital ledger, transactions could be completed faster, with enhanced security measures and significantly lower operational costs for all stakeholders.\u201d<\/p>\n

Two-Tiered Experimentation<\/strong><\/p>\n

The initiative was executed in two streams:<\/p>\n

    \n
  1. Stream 1:<\/strong> In collaboration with Generali as investor, AXA IM as issuer \/ asset manager of the tokenized fund, and BNP Paribas\u2019 Securities Services business providing existing services and managing its clients\u2019 wallets in BdF\u2019s DL3S, the experiment focused on the subscription of fund units using Banque de France\u2019s cash token.<\/li>\n
  2. Stream 2:<\/strong> Partnering with Generali as investor, OFI Invest AM as issuer \/ asset manager of the tokenized fund, Societe Generale and Societe Generale-FORGE, this stream demonstrated the wholesale CeBM\u2019s capabilities in a complex, multi-layered financial operation. This included the subscription of fund units in wholesale CeBM, which were subsequently reinvested into other funds, and bonds issued by Societe Generale. It concluded with the redemption of positions. Societe Generale Securities Services acted as Paying Agent.<\/li>\n<\/ol>\n

    Implications for the Financial Ecosystem<\/strong><\/p>\n

    “This experiment carried out in real conditions demonstrated that it was possible to safely reduce the settlement and delivery times of transactions on financial instruments thanks to the interoperability of blockchains between them and the guarantee provided by the digital wholesale Central Bank Money (CeBM). We are collectively very happy and proud of this result which paves the way for a real technological advance for post-market processes, with the use of tokens for a secure settlement method for this type of operation thanks to the CeBM,” stated Jean-Pierre Grimaud<\/strong>, CEO of OFI Invest AM.<\/p>\n

    \u201cAt Generali, we have leveraged IZNES to manage our fund positions efficiently using blockchain. The success of this experimentation with the Eurosystem and the CeBM demonstrates the transformative potential of blockchain technology in streamlining fund management processes. The introduction of a wholesale CeBM represents a significant step forward for insurers like Generali, simplifying operations and enhancing transparency across the funds ecosystem,\u201d further added R\u00e9mi Cuinat<\/strong>, Director of Unit-linked Assets at Generali.<\/p>\n

    This successful experimentation highlights the potential of wholesale CeBM to enhance the efficiency, security, and resilience of financial markets. It sets a precedent for the integration of a wholesale CeBM into real-world financial applications, demonstrating their viability as a cornerstone of the future financial ecosystem.<\/p>\n

    Acknowledgements<\/strong><\/h3>\n

    IZNES wishes to extend its heartfelt thanks to the dedicated individuals and teams who contributed to the success of this groundbreaking wholesale CeBM experimentation:<\/p>\n