The Banque de France made public on March 27 a request for digital currency experiment applications, in an attempt to understand the mechanisms and risks CBDCs pose in the eurozone.
France comes upfront when it comes to the digital currencies debate, being the eurozone member with the highest profile as far as launching a CBDC goes next to Sweden, where the Riksbank is also trying to digitize currency using the krona.
4 Years Since the Banque de France is Advocating Fintech Projects
Banque de France has been advocating experimental and more advanced fintech projects since 4 years ago. It has been posting jobs and holding speeches on CBDC development all the time. Here’s what its governor, François Villeroy de Galhau, said in a speech on CBDCs from December 4:
“We as central banks must and want to take up this call for innovation at a time when private initiatives – especially payments between financial players – and technologies are accelerating, and public and political demand is increasing.”
3 CBDC Usage Cases Addressed
France has been tackling 3 CBDC use cases, such as payment against digital assets, payments against financial instruments and payments against other central banks. It doesn’t advocate money creation and says the bank’s tokens books should be destroyed when each payment day ends. Furthermore, it plans to examine the potential impact of CBDCs on market infrastructures, regulatory frameworks, macroeconomic factors and monetary policy.
The Development of a Blockchain-Based CBDC Not Necessary
When it comes to technology, the bank said that it’s neutral and doesn’t necessarily want to develop a blockchain-based CBDC, being open to innovative solutions. On July 10, 10 project applicants that have to come from the EU will be selected. However, all this doesn’t mean the bank is going to necessarily issue a CBDC. Here is what it said in a statement:
“Indeed, any decision to create a CBDC is a matter for the Eurosystem. Consequently, the Banque de France does not intend to perpetuate or conduct such experiments on a widespread basis.”
Christine Lagarde, who has been France’s minister of economy and now runs the European Central Bank, has always been pro the ECB developing a CBDC, ever since she became the head of the institution in November 2019.