France’s central bank is urging Europe to explore the development of a wholesale central bank digital currency (CBDC). They want blockchain-based settlement system that will move euros more quickly and at less cost, according to the bank’s first deputy governor Denis Beau. In a speech, Beau says that his organisation is “quite open for experiments”.
According to Beau, 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. Cross-border payments could be a particularly viable DLT use case. Residents in the EU and beyond often wait extended periods for payments to wend between banks and their international partners, in the “correspondent banking model” that delivers an often-insecure service for a high price.
Tokenized assets combined with DLT, tokens could seamlessly move funds and “help in answering market’s demands. In October it began searching for a blockchain analyst to help it design a digital currency implementation program.
“As a major provider of critical wholesale clearing and
settlement services in euro, [the Eurozone] 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”
Central Banks and Innovative Fintech
The ECB named a new chief for its fintech-focused “Innovation Hub” in early November, issuing at the time a mandate that the hub “foster international collaboration among central banks on innovative financial technology”. It is a sign that the ECB is up ready for blockchain and DLT.
In mid-October, Beau stated that the traditional bank-based ecosystem could face significant changes due to the many technological developments, such as blockchain and DLT, explaining:
“With the emergence of so called crypto-assets and so called stablecoins, we may also see new settlement assets develop which may compete against and possibly, according to their promoters, replace commercial and central bank money as settlement assets at the center of our payment systems.”