Banque De France

European financial institutions are using pilots to make a case for the digital euro.

It turns out the 100 million euro digital bond issued by the European Investment Bank earlier this week was actually a trial of a European central bank-issued digital currency, or CBDC.

An April 28 announcement from France’s central bank, Banque de France, revealed the digital bond was settled using a CBDC on a blockchain.

The two year-bond was issued on the Ethereum public blockchain on April 27 and settled the following day, with a maturity date of April 28, 2023. The sale was led by Goldman Sachs, Santander and Société Générale.

“From a technological standpoint, the experiment required the development and deployment of smart contracts under secured conditions, so that the Banque de France could issue and control the circulation of CBDC tokens and so that CBDC transfer occurred simultaneously with the delivery of securities tokens to the investors’ portfolio,” Banque de France said.

The bank also revealed plans for further experiments in the future, noting that its efforts are part a push to provide evidence of use cases for a European CBDC:

“In the coming months and in cooperation with the market, the Banque de France will conduct additional experimentations to assess other uses of central bank digital currency in interbank settlements.”

The news that the EIB had issued the bond on Ethereum pumped the Ether (ETH) price to $2,709 on Wednesday. Danny Kim, head of revenue at crypto broker SFOX told Reuters the announcement “triggered a bullish institutional use case for Ethereum.”

Despite the bullishness on Ethereum, the wait for a digital euro may still take some time, as the European Central Bank did not participate in the pilot.

In January this year, President of the European Central Bank Christine Lagarde said that the development of a digital euro is "going to take a good chunk of time to make sure it's safe," adding, "I would hope that it's no more than five years.”

On April 12, ConsenSys South Africa lead Monica Singer warned that Europe may be left behind if its too slow to pull the trigger:

“If the central bank in Europe is gonna wait until 2028, by then there won’t be a central bank. Because who’s gonna use the euro in its current form? There are gonna be so many choices.”