France and UK advance on central bank digital currencies – government and public service news

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The Banque de France aims to identify “concrete cases integrating CBDCs into innovative procedures for clearing and settling token financial assets”. (Photo by acmolenaar via flickr).

The central banks of France and the United Kingdom have turned towards the creation of digital central bank currencies (CBDC), the Banque de France launching a call for applications to experiment with a CBDC for interbank settlements, while the Banque d ‘ England (BoE) publishes a working document that assesses the risks and benefits of CBDCs.

These separate measures come as an increasing number of monetary authorities around the world continue to explore the potential of the CDBC program. The trend is driven by technological advances and declining cash use in many countries, and has been spurred on in recent weeks by the move to contactless payments during the global coronavirus pandemic.

France joins the Eurosystem

The Banque de France wishes to identify “concrete cases integrating CBDCs into innovative procedures for clearing and settling token financial assets”, according to its call for applications.

The bank said in its call for applications that the results of its experiments are fueling its contribution to a larger project by the Eurosystem – the monetary authority of the euro area – on the potential implementation of a CBDC. He stressed that “any decision to create a CBDC is a matter for the Eurosystem”.

The deadline for submitting applications to the Banque de France is May 15, with interviews in June and a selection of applications in July.

World Government Forum reported last year that the European Central Bank, headquartered in Frankfurt, was investigating the technical aspects of a digital currency, with several options being explored.

The Banque de France had previously suggested that it planned to intensify its research on the CBDC, with governor François Villeroy de Galhau saying in a speech in December 2019: “The creation of a CBDC […] is neither a prerequisite nor a guarantee of more efficient payments. However, as central banks, we must and want to respond to this call for innovation at a time when private initiatives – in particular payments between financial actors – and technologies are accelerating, and public and political demand increases. Other countries have led the way – it is now up to us to play our part, both ambitiously and methodically. “

The work is coordinated by the Infrastructure, Innovation and Payments Department (DIIP) of the Banque de France within the Directorate General for Financial Stability and Operations (DGSO). The experiments will be carried out with the support of the Banque de France’s open innovation laboratory, Le Lab.

Bank of England Focuses on Retail CBDC

Meanwhile, on the other side of the Channel, the BoE is currently receiving contributions to its CBDC working document.

The purpose of the 57-page document, Central Bank Digital Currency: Opportunities, Challenges and Design, is to “start a dialogue on the appropriate design of the CBDC and an assessment of whether the benefits of the CBDC outweigh the benefits.” risks, “says the BoE.

The document focuses exclusively on the retail CBDC, designed to meet the payment needs of households and businesses outside the financial sector.

Among the points raised in the document, the BoE says that “a very successful CBDC could displace existing payment systems and ultimately reduce the diversity of payment options, creating a new form of concentration risk.” He adds that “the prospect of the introduction of the CBDC could discourage innovation in existing payment systems, potentially delaying other initiatives that could improve resilience, speed and efficiency. These risks should be carefully managed. ”

The BoE says its ongoing work on CBDCs will focus on four areas: the impact on payments; impact on monetary and financial stability; the functionality and supply of CBDCs, including identifying the appropriate role of the public and private sector; and technology. The working document poses a total of 35 questions on these four themes. The deadline for responses is June 12.

Coronavirus highlights resilient payment types

Meanwhile, the Bank for International Settlements (BIS), headquartered in Switzerland, last week released Covid-19, Cash, and The Future of Payments, a bulletin examining how different countries have responded to the coronavirus.

The bulletin said that “payment infrastructure managed by resilient and accessible central banks could quickly become larger, including retail CBDCs.” He added that the pandemic “could focus on calls to CBDCs, emphasizing the value of having access to various means of payment and the need for any means of payment to withstand a wide range of threats.”

Another big country that is making progress in the area of ​​CBDCs is China. Coin Telegraph announced earlier this week that the People’s Bank of China is continuing to make progress toward issuing a digital yuan. World Government Forum last year explained how the country is progressing towards a CBDC.

Earlier this year World Government Forum reported that the BoE had partnered with the Bank of Canada, the Bank of Japan, Sveriges Riksbank (Sweden) and the Swiss National Bank, as well as the ECB and the BIS, to share their experiences by assessing the potential of CBDCs in their home jurisdictions.



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