The global financial and payments ecosystem is undergoing a transformation with the rise of central bank digital currencies (CBDCs). The European Investment Bank (EIB) recently issued its sixth digital bond, worth €100 million, using the Banque de France’s wholesale CBDC for settlement. This move has generated excitement in the financial ecosystem due to its atomic settlement via delivery rather than payment. The EIB collaborated with Goldman Sachs’ GS DAP platform for bond tokenization, with BNY Mellon as the custodian and investor in the transaction.
Banque de France refers to its offering as “exploratory cash tokens” rather than a wholesale CBDC, showcasing its experimental nature and token-based architecture. The French central bank’s DL3S distributed ledger was chosen by the EIB from a selection of three solutions, highlighting the push towards exploring tokenization use cases for CBDCs. The EIB has been actively experimenting with digital bonds, with previous issuances exploring different features such as green bonds and permissioned digital ledgers.
In Iran, the Central Bank announced plans to commercially release its CBDC for retail use after years of experiments. The digital rial has been in development since 2018, with the central bank focusing on domestic applications and facilitating offline and contactless payments. Iran has faced economic sanctions, leading to partnerships with countries like Russia to explore alternative payment systems and navigate around embargoes. Despite the push towards digital assets, service providers are cautious of potential sanctions from US authorities for facilitating digital currency trade with Iran.
The EIB’s latest digital bond issuance signifies a trend towards exploring the potential of CBDCs in the financial ecosystem. Collaborations with financial institutions and leveraging distributed ledger technology platforms like GS DAP showcase a shift towards tokenization and digital asset adoption. Similarly, Iran’s development of the digital rial reflects a global trend towards exploring CBDCs as a means to enhance payment systems and navigate economic challenges.
As the financial landscape continues to evolve, the adoption of CBDCs and digital assets is gaining momentum. Institutions like the EIB and central banks like Iran’s CBI are at the forefront of exploring the potential of digital currencies for enhancing transparency, security, and efficiency in payment systems. While there are regulatory challenges and economic hurdles to overcome, the push towards digital innovation in banking and payments is evident in the growing interest in CBDCs and tokenization. Amidst these developments, partnerships and collaborations between countries and service providers play a crucial role in shaping the future of digital currencies and payment systems.
