Banque du France gave an update on its Central Bank Digital Currency (CBDC) experiments at Paris Blockchain Week Summit.
First Deputy Governor of the Banque du France, Mr. Denis Beau, spoke in particular about the variety of factors to take into consideration while engaging in trials of the digital euro.
The French central bank trials focus on the critical areas of transaction clearing and settlement. Beau stated that in particular, cross-border transactions can be made more efficient with the help of tokenization. Both time delays and anti-money laundering (AML) uncertainties may decrease. At the same time, Beau stressed that the new system must not also introduce new risks or ‘negative collateral effects’.
Banking the banked but better
Beau also spoke about improving services through ensuring better access to banking for ‘more fragile populations, households, and small businesses’. By doing so, economic development is furthered. However, he also noted risks outside of the technology itself. He specified risks coming in the form of alienating those who are uncomfortable with increasing digitization and those with security concerns.
As the French central bank’s mandate extends to supporting financial inclusion, balancing development and concerns is a central focus during the trials under way.
Beau also touched upon the need for Banque du France to have an active role in developing regulation. Some of his comments echoed those his Bundesbank counterparts uttered at the Future of Payments conference in Frankfurt in November. They called for the development of the digital euro to counter foreign CBDC intrusion. Likewise, Beau stated that adapting ‘global stablecoins’ needs to fit what he calls ‘two fundamentals of financial sector regulation’. These are financial stability and monetary sovereignty.
How far along are they?
At Frankfurt, German finance minister Olaf Scholz spoke about the need to launch the digital euro as soon as possible. European Central Bank executive board member Fabio Panetta laid out a framework for ‘the reinvention of money‘.
However, at Paris, Denis Beau actually showed how close the Eurosystem is to introducing it.
The experiments underway directly relate to the need for the Eurosystem, should circumstances so require, to be ready to issue a CBDC in order to ensure that central bank money is accessible to the general public and to preserve their freedom of choice of means of payment and their confidence in our currency.Denis Beau
Beau also pointed out that the French central bank participates in tests that bring the digital euro to the general public. These are only tests, and not even an initial roll-out, as China is doing. But they do show how close in China’s tracks the Eurosystem is following.
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