April 6, 2020

Banque de France to experiment in digital currencies

By Raymond Harte, CEO, Mozaic Markets

We live in unprecedented times where media reports are dominated by the spread of COVID-19 and its impact on the world as we know it.

I was therefore pleased to read about something different this week and learn Banque de France is joining the growing number of central banks testing digital currencies (CBDC).

France’s central bank is calling for applications to experiment with the use of a digital euro issued for interbank settlements.

The aim is to explore and identify concrete cases integrating CBDC in innovative procedures for the clearing and settlement of tokenized financial assets.

This is pleasing news and something we at Mozaic Markets and 2030 Group have been following since Banque de France Governor, François Villeroy de Galhau’s comments late last year indicating a Q1 2020 timetable for France.

According to Banque de France, their experiment will have a threefold objective:

  1. Show how "traditional" interbank settlement could be carried out using CBDC based on different technologies;
  2. Identify the benefits of CBDC for the current ecosystem of market and payment infrastructures (including productivity gains) and understand how CBDC could foster financial innovation;
  3. Analyse what the effects of introducing a CBDC would be on financial stability, monetary policy and the regulatory environment.

The experimental framework is logical, and we support Banque de France’s approach. My only reservation is around comments I have seen in the media indicating

Submission deadline for applications is in six weeks on May 15, 2020 with the successful ten applications expected to be selected on July 10, 2020.

We will be taking this opportunity seriously and will submit an application if we think our innovation and technology would make sense to this experiment.

We will also continue in our discussions with both the Banque de France, European Central Bank and the French financial regulator, the Autorité des Marchés Financiers (AMF) on the future of tokenization in France and the European Union as a whole.

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