On May 14, the Bank of France (Banque de France) successfully tested the use of a Blockchain. First, to experiment with the use of a digital currency from the Central Bank.
François Villeroy de Galhau, Governor of the Central Bank, said:
“The creation of a digital currency from the Central Bank (CBDC) is not a precondition or a guarantee of more efficient payments.”
He also highlighted: “However, we must and want to accept this call for innovation“
A little story
The Bank of France is an independent institution governed by French and European law. Similarly, it is a member of the Eurosystem, which is the federal system that comprises the European Central Bank and the national central banks of the euro area.
The Bank of France begins to experiment with digital currency
The Bank of France launched a pilot project to test the integration of digital currency in settlement procedures.
When giving the information, the Bank of France indicated that the project has several objectives:
- Show how traditional interbank settlement can be carried out using the digital currency of the Central Bank (CBDC).
- Identify the benefits and analyze the effects of CBDC. Mainly in financial stability and monetary policy.
The Bank of France project
This project covers the uses of CBDC:
- Payment before financial instruments.
- Payment with the digital currency of other central banks, and payment with digital assets.
- There will be no creation of Fiat, according to the bank.
- All exchanges will go through the bank’s Ledgers, with tokens destroyed at the end of each payday.
Additionally, the project will examine the possible consequences of CBDC on market infrastructure, monetary policy, macroeconomic factors, and legal and regulatory frameworks.
The objective of this project is to explore with partners the possible contributions of new technologies to improve the functioning of financial markets.
In the coming weeks, the Bank of France will carry out other experiments in cooperation with other actors. Likewise, based on the files received as part of the call for applications since March 27, 2020.
The results of these projects will be an important element of the Bank of France’s contribution to the reflection led by the Eurosystem on the interest of an MDBC.
In particular, the Central Bank said that the challenge of these projects is not to replace notes and coins.
To date, France comes to the fore, as it is the most prominent member of the European zone to launch a project with CBDC. Although there is Sweden, whose Riksbank is also experimenting with digital currency.