The results of the French central bank’s tests with a wholesale central bank digital currency have been revealed (CBDC). The CBDC was used in the tests to make wholesale payments, such as securities settlements and cross-border financial transfers.
In 2020, the Bank of France began testing CBDC with digital companies and commercial banks. It began nine studies concentrating on various components of the CBDC and finished seven of them, according to the 22-page report.
The tests focused on two main areas: the usage of a CBDC in cross-border and cross-currency payments. The bank experimented with interoperable systems under the multiple CBDCs (mCBDC) concept, acknowledging that other countries may issue CBDCs of their own.
The bank also tried out DLT-based solutions for securities settlement. It focused on how a CBDC may help secure the development of tokenized financial markets in this setting. This would allow market participants to benefit from the benefits of DLT while maintaining the security of central bank money settlement.
It was found that the Bank of France’s tests used both public and private blockchains. The conclusion was that a wholesale CBDC could be implemented on multiple types of DLT and would be a useful payment method, supplementing CeBM (central bank money) with new features and use cases while also encouraging financial sector innovation.
In addition, the research identified several concerns about a wholesale CBDC. They include the CBDC‘s macroeconomic impact and monetary policy consequences, as well as which technological choice would be most suited to support it. Additional experiments, the bank believes, could resolve these open issues and concerns.
The Director General of Financial Stability and Operations, Nathalie Aufauvre, stated,
“These experiments with a wholesale CBDC were carried out in record time, in less than a year, and show how interested market participants are in the subject, as well as their expectations regarding public authorities.”