The Shift towards Wholesale Central Bank Digital Currencies: Insights from Banque de France's Experiments
Discover the fascinating outcomes of Banque de France's wholesale central bank digital currency (wCBDC) trial and their implications for the financial system.
Over the past three years, Banque de France conducted twelve diverse tests in collaboration with European central banks, commercial banks, and fintech partners. The purpose? To explore different models for issuing wCBDC and understand their impact on the financial landscape.
What did they find? Firstly, a wCBDC can complement a retail CBDC, catering to retail consumers' small-scale transactions while preserving the value of government-issued digital money.
Furthermore, the experiments stressed the importance of energy-efficient solutions to address climate concerns in wholesale CBDC design. The use of blockchain technology emerged as a powerful tool, enabling central banks to maintain control, enhance straight-through processing, and improve financial stability.
Tokenizing central bank money showed promise in revolutionizing cross-border payments and settlement security for various financial assets, from government bonds to fund shares.
In another collaborative trial with the Swiss National Bank and the Monetary Authority of Singapore, Banque de France explored the optimization of wCBDC liquidity through an automated market maker (AMM) on a shared platform.
Banque de France's approach aligns with recent conceptual work by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) on cross-border payments and unified ledgers for tokenized assets, respectively.
