Jul 22, 2023 12:25
The central bank of France is planning to collaborate
with private companies in the rollout of a central bank digital currency (CBDC)
for institutional and retail clients. The bank issued
recommendations for policies that could support the launch of the CBDC in the country.
The central bank of
France conducted an experiment on wholesale CBDC in 2020. A wholesale CBDC is a
digital representation of the currency issued by a central bank to
institutions, while a retail CBDC is meant for everyday use by consumers.
Currently, the Bank of France is studying the feasibility of issuing a wholesale
CBDC on a distributed digital ledger.
Bank of France Explores
Interoperability in CBDCs
Additionally, the institution has proposed
interoperability between the systems of the traditional financial institutions
and the distributed ledger platforms supporting the CBDC. Besides that, the institution wants the technology
around the digital asset to be energy-efficient to prevent any negative impact on the environment.
The International
Monetary Fund's Managing Director, Kristalina Georgieva, holds similar views
about the interoperability of the networks supporting CBDCs. In a report
by Finance
Magnates in June, the
IMF disclosed that it was working
on a global infrastructure for
CBDCs.
Additionally, the
experiments conducted by the Bank of France aim to assess the tokenization of
fiat currencies to facilitate cross-border payments. According to the
Paris-based institution, tokenizing financial instruments promotes a safer way
to transact CBDCs.
On top of that,
according to Thursday's report, the Bank of France is exploring how to offer a wider range of financial services, including government bonds through CBDCs, which cannot otherwise be settled through the TARGET services offered in
the Eurozone. TARGET services are the financial services that cover securities
trading and payments offered by Eurosystem, a monetary authority in the
Eurozone.
Cross-Border Payments
Commenting about the latest report, Emmanuelle Assouan,
the Deputy Director General for financial stability and operations at the Bank
of France, said: "These twelve experiments, which were all carried out
successfully with our partners, central banks and commercial banks, in a public
private partnership, have provided us with the assurance that CBDCs can be
offered in a tokenized form to improve cross-border payments."
Similarly,
about three weeks ago, Singapore's central bank, the Monetary Authority of
Singapore (MAS), published a report on the guidelines for creating
interoperable networks for
digital assets. The report is part of the measures the MAS is taking to ensure
digital assets are safe and efficient.
This article was written by Jared Kirui at www.financemagnates.com.
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