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France central bank invites firms to experiment digital currencies

Image by Skeeze from Pixabay

Wed, 08 Apr 2020, 06:50 am UTC

Banque de France is opening its door to central bank digital currencies (CBDC) as it invites firms to join in its crypto experiment.

The central bank released a document dated March 27 with the title “Central Bank Digital Currency Experiments With The Banque De France: Call for applications package.” It aims to conduct an experiment about CBDCs.

“The creation of a central bank digital currency (CBDC) [...] is neither a precondition for nor a guarantee of more efficient payments. However, we as central banks must and want to take up this call for innovation at a time when private initiatives – especially payments between financial players – and technologies are accelerating, and public and political demand is increasing. Other countries have paved the way; it is now up to us to play our part, both ambitiously and methodically,“ the document read.

The experiment has a threefold objective. It aims to achieve the following:

  1. Show how conventional use cases for central bank money can be achieved through a CBDC based on different technologies
  2. Identify the benefits of introducing a CBDC for the current ecosystem and understand how a CBDC might foster financial innovation
  3. Conduct a detailed analysis of the potential effects of introducing a CBDC on financial stability, monetary policy, and the regulatory environment

Those who want to participate need to read section 4 to understand the application process. Section 4.1 shows the eligibility criteria that one must follow.

Applications should be sent electronically until May 15 at 3 p.m. CET at [email protected]. Any questions or concerns can be sent on the same address.

Meanwhile, SEB chief strategist Johan Javeus said that CBDC could cause potential friction between commercial and central banks. If central banks release digital currencies to consumers directly, anyone who wishes to use digital currency would need to have some sort of account with them and that would put a competition between central and commercial banks in terms of holding the people’s cash.

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