Banque de France began to explore the Digital Euro
French bank released call for applications package called “CENTRAL BANK DIGITAL CURRENCY EXPERIMENTS WITH THE BANQUE DE FRANCE”
One of the first proponents of technological advancement is François Villeroy de Galhau – Governor of the Banque de France, who said on December 4, 2019:
“The creation of a central bank digital currency (CBDC) is neither a precondition for nor a guarantee of more efficient payments. However, 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.
Other countries have paved the way; it is now up to us to play our part, both ambitiously and methodically.“
and today we are witnessing the first real call to experiment with digital currencies.
In the call, the French bank writes that at present almost all central banks pay great attention to innovation and the evolution of the payment environment.
They argue that new technologies in the area of payments and market infrastructures bring many opportunities and that is why they are researching and wanting to create a new kind of money, that will serve the general public.
The Banque de France thus begins to experiment and test the integration of the CBDC digital currency into innovative procedures for the exchange and settlement of tokenized financial assets between financial intermediaries.
These experiments will serve as an addition from the Banque de France within Eurosystem discussions, which will then decide whether the CBDC will see the light of day.
- This document is the first call for applications to conduct a CBDC experiment with the Banque de France.
- All experimental work is coordinated by competent authorities such as the Innovation and Payments Directorate (DIIP), within the General Financial Stability and Operations Directorate (DGSO)
- The experiments will be conducted with support from the Banque de France’s open innovation laboratory (LAB).
In one of the review points, the bank looks at:
a) Test use cases for a CBDC
- payment in central bank money against delivery of listed or unlisted financial instruments (“delivery-versus-payment”)
- payment in central bank money against the digital currency of another central bank (“payment-versus-payment”)
- payment in central bank money against digital assets (as defined in the French Monetary and Financial Code)
b) Assess the possible consequences of introducing a CBDC for the ecosystem built around market infrastructures
c) Analyse the macroeconomic, monetary, financial and legal consequences of introducing a CBDC
Experiments should allow an initial assessment of the following:
- the possibilities for developing transactions relating to financial assets, including existing financial instruments as well as new assets, on the basis of new technologies.
- the potential consequences for trading volumes and the intraday distribution of trading on the intraday money market, notably owing to the 24/24 availability of the CBDC.
- the impact on monetary policy transmission.
- possible restrictions imposed by the existing legal and regulatory framework.
In other sections of document, the bank also focuses on Provision of resources by the Banque de France,Description of the application and more
As part of the preliminary schedule, the Bank has published the following important dates:
- Deadline for applicants to submit questions to the Banque de France 20 April 2020 at 3 p.m.(CET)
- Deadline for the Banque de France to respond to applicants’ questions 30 April 2020
- Submission deadline for digital applications 15 May 2020 at 3 p.m.
- Interviews with applicants submitting eligible packages June 2020
- Selection of applications 10 July 2020
- Signature of contracts prior to start-up of experiments From 13 July 2020
As you can see at a time when we are experiencing difficult times and the future of our economies is uncertain, increasing interest in currency digitization, can lead to greater stability and more successfully overcoming the current and future economic crisis situation in the world
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