The French central bank has published the results of its experiments on a wholesale central bank digital currency (CBDC). The experiments focused on the use of the CBDC for wholesale payments, including securities settlement and cross-border funds transfer.
Bank of France began its CBDC experiments in 2020, working with tech firms and commercial banks. It initiated nine experiments focusing on various aspects of the CBDC, and according to the 22-page report, it has completed seven of these.
The experiments focused on two major fields, one being the use of a CBDC in cross-border and cross-currency payments. Acknowledging that other countries may issues CBDCs of their own, the bank experimented with interoperable systems under the multiple CBDCs (mCBDC) model.
The bank also experimented on securities settlement using DLT-based platforms. In this context, it focused on how a CBDC could contribute to the secure development of tokenized financial markets. This would allow market participants to benefit from the advantages of DLT while continuing to provide safe settlement in central bank money.
Bank of France’s experiments involved both public and private blockchains, it revealed. The conclusion was that a wholesale CBDC “can be implemented on various types of DLT and would be an effective means of payment, enriching CeBM (central bank money) with new functionalities and use cases as well as promoting innovation in financial markets.”
The report also raised some questions regarding a wholesale CBDC. They include its macroeconomic impact and implications for monetary policy, as well as which technology option would be best suited to underpin the CBDC. These open issues and concerns could be addressed through additional experiments, the bank believes.
Nathalie Aufauvre, the Director General of Financial Stability and Operations, remarked, “These experiments with a wholesale CBDC were carried out in record time, in less than a year, and show how interested market participants are in the subject, as well as their expectations regarding public authorities.”
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