France's central bank is urging Europe to explore the development of a wholesale central bank digital currency (CBDC).
Central banks around the world have been exploring the creation of their own digital currencies. China is widely understood to be close to launching its version while there has been speculation that the European Central Bank could one day make the leap.
In a speech, Banque de France first deputy governor Denis Beau says that his organisation is "quite open for experiments" with the ECB on a wholesale CBDC.
Speaking about the inefficiencies that still bedevil cross-border payments, Beau says: "The tokenisation of financial assets combined with the recourse to blockchain-based solutions and more broadly distributed ledger technologies to store and transfer those assets could help answering market’s demands."
However, any benefits could be lost because of "disorderly approaches", in particularly when it comes to the modalities of settlement, if central banks do not take the lead.
"Therefore, the Eurosystem, as a major provider of critical wholesale clearing and settlement services in euro, should be open to experimenting these innovations in order to revisit and possibly improve the conditions under which we make available central bank money as a settlement asset," says Beau.
He concludes: "One possibility often mentioned would be for us to issue a central bank digital currency to support wholesale clearing and settlement services on a decentralised basis using DLT. We, at the Banque de France, are therefore quite open for experiments in that direction, together with the ECB and other central banks of the Eurosystem".