The central bank of France would not allow the country to get left behind by Sweden and the Bahamas in terms of exploring the benefits of a central bank digital currency (CBDC). As per the document released on March 30, the financial institution is firing up its efforts in the realization of its CBDC plans.
Notably, a program that aims to integrate CBDC for interbank clearing and settlement had been launched by the Bank of France. This initiative encourages relevant parties to file applications that involve the use of digital euro. It was clarified that applications must be submitted by participants who are based in the EU or any state party to the European Economic Area agreement until May 15, 2020.
However, analysts noted that while the Bank of France had previously announced its positive stance on settlement systems that are based on Blockchain, it didn’t specify any kind of technology that participants must use in their newly-launched CBDC exploration program.
Notably, the central bank would review all the applications and will choose the top ten most promising, using “innovative nature” as the primary criterion. The selected applications would be revealed on July 10.
The main focus of the CBDC experiment
The central bank explained the three primary objectives of the program –create an interbank settlement modeled after CBDC, analyze potential risks, and identify benefits. Among these potential use cases for digital euro, the bank emphasized payment systems against other known kinds of CBDCs, financial instruments, and other digital assets.
However, in the document, the bank clarified that the experiment does not include money creation, nor does it have the intention to widen the scope of the project and make it long-term. Furthermore, all the digital tokens that reflect the amount in euros would be destroyed at the end of the accounting date on which the payment had been settled.
This development reflects what François Villeroy, the governor of the Bank of France, said last December. In his speech, he revealed the plans of the bank to conduct CBDC testing within the first quarter of this year and to launch by the second quarter. His predecessor, Denis Beau, had also emphasized that Blockchain could indeed help in improving financial processes that include cross-currency payments.
Back in November, the chief of the European Central Bank, Christine Lagarde, advocated for the financial institution to embrace and expand its role in terms of developing a central bank digital currency.