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 today (Friday).
The central bank of France has been conducting experiments on wholesale CBDC since 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 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 boss disclosed that the institution 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 products, including government bonds through CBDCs, which cannot be settled through the TARGET services offered in the Eurozone. TARGET services are the financial services, including securities trading and payments services 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 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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