The Bank of France is officially launching experiment program to test the integration of a CBDC for interbank payments. It is inviting potential participants to submit their applications.
31 March, 2020 | AtoZ Markets – Several global jurisdictions like the Bahamas and Sweden are already testing their central bank digital currencies (CBDCs). Meanwhile, the French Central Bank is more direct about its CBDC projects. The Bank of France has invited applications for a CBDC experiment program.
It will provide the information necessary for the development and launch of a CBDC. It contributes to the creation of a digital currency framework for the eurozone. Previously, the bank has shown considerable interest in launching a virtual currency, although after undertaking critical research.
France’s Central Bank Requests Proposals For CBDC Experiment
The French central bank is calling for applications to experiment with the use of a digital euro. It is also aiming to explore the possibilities of the CBDC for the compensation and settlement of tokenized financial assets. France being a prominent member of the eurozone, it will certainly help shape the bloc’s cryptocurrency initiatives.
Thus, the French central bank will select a maximum of 10 applications linked to the CBDC by groups or individuals, establishing “innovative nature” as a major selection criterion. Applications must be submitted by applicants based in the European Union or a State party to the Agreement on the European Economic Area. Applicants can apply until May 15, 2020. The selection of applications will take place on July 10, the bank also said.
François Villeroy de Galhau, governor of the French central bank, said that the institution calls on innovative technology companies to join this initiative. Today, the private payments network is growing rapidly, and financial technologies are driving the demand for virtual financial solutions. Moreover, a CBDC is a natural scalable solution, like the futuristic financial ecosystem. The Bank of France also stressed that it does not plan to apply a project on a larger scale, clarifying:
“These experiences will act as a contribution by the Bank of France to a wider discussion within the Eurosystem. It will take any decision on the advisability of creating a CBDC. The experiments are not intended to be pursued in the long term nor to be applied on a large scale by the Bank of France itself “.
The Experiment Program Will Cover Various Aspects
It also added that other countries are actively pursuing the development of virtual currency. It is now time for France to contribute to these efforts. The experiences will cover various aspects, including:
- Issuance of digital currency from the French central bank,
- Development phase,
- Exploration of potential technical challenges and
- Study of the impact of a CBDC on the conventional economy.
It will cover a range of potential CBDC scenarios, including payments for digital assets, collaboration with other central bank payments and payments for other financial instruments. More importantly, the experiments will measure the potential impact of a digital currency on traditional monetary infrastructure, macroeconomic factors, legal and fiscal obstacles and regulatory frameworks.
The bank has stressed that it will not engage in money creation as part of its CBDC experience. The bank also indicated that it would destroy the token reflecting the digital euro amount at the end of the accounting day in which the payment was made.
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