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Banque de France reports back on wholesale CBDC programme

Banque de France reports back on wholesale CBDC programme

The Banque de France has published an upbeat report on its series of experiments with a wholesale CBDC but says its work has also thrown up new questions.

The French central bank began its wholesale CBDC programme last year, working with private banks and tech firms as well as other public authorities on nine experiments, seven of which have been completed.

The bank says that the experiments showed how a CBDC can be used for wholesale payments, including cross-border and cross-currency payments and securities settlement.

The experiments also tested several ways in which central banks could retain control over central bank money on DLT, notably by tapping blockchains’ ability to implement programmability features.

The programme involved the use of various technologies, including private and public blockchains, as well as other distributed systems, showing that a wholesale CBDC can be implemented on various types of DLT and "would be an effective means of payment, enriching central bank money with new functionalities and use cases as well as promoting innovation in financial markets".

Nathalie Aufauvre, head of the Banque de France’s experimentation programme, says: "With the emergence of financial assets in tokenised form, we have shown that a CBDC, combined with the potential of new technologies, can ensure the safe settlement of transactions in these assets and thereby contribute to the secure development of these innovations.

"We have also demonstrated that a wholesale CBDC would be of benefit for cross-border and cross-currency payments as it would improve the efficiency of processing chains."

However, the experiments have also raised questions, says the bank, most importantly about how the issuance of a wholesale CBDC that was available to a large number of market participants could affect the role of financial intermediaries and the transmission of monetary policy.

"It is essential, therefore, that central banks retain full control over a wholesale CBDC once it has entered circulation," says the report.

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