The Banque de France (Banque de France) has conducted numerous tests with blockchain and has determined that a wholesale central bank digital currency (wCBDC) will improve cross-border payments, settlement finality and the security of a wide range of financial assets, the Banque de France announced today.
“Through these experiments, Banque de France was able to demonstrate the operational feasibility and practicality for deployment of the three models envisioned for issuing wholesale CBDCs directly on DLT (Distributed Ledger Technology),” the bank said, adding that different types of DLT were used to test their applications in tokenizing assets and improving cross-border transactions.
Banque de France started a wholesale CBDC trial in March 2020. It will conduct a second phase experiment by mid-2022 and has completed 12 experiments so far, including a bond settlement worth €100 million ($104 million) with Luxembourg. Examples include projects with the Monetary Authority of Singapore, the Swiss National Bank and the innovation hubs of the Bank for International Settlements (BIS).
These experiments showed that wholesale CBDCs are “key to native digital assets and tokenized assets that are classified as private financial assets and are currently unsettled.”
Central banks around the world are actively experimenting with CBDCs to improve wholesale payments, and the BIS is leading several of them. India, for example, has begun a similar experiment, and the European Central Bank (ECB) is set to launch one in 2024. Banque de France said supporting a European pilot would be one of its next steps.
Banque de France has revealed that a wholesale CBDC issuance will complement retail CBDCs such as the digital euro. Interoperability for seamless data exchange, international cooperation and public-private partnerships for a more comprehensive global CBDC framework remain priorities, the bank said.
According to the bank, “climate change concerns underscore the need to develop energy efficient solutions in the design of wholesale CBDCs.”
｜Translation: CoinDesk JAPAN
｜Editing: Takayuki Masuda
｜Original: Wholesale CBDC Would Improve Cross-Border Payments, French Central Bank Tests Show