- The Bank of France will be conducting experiments to test the integration of a central bank digital currency for interbank settlements.
- Through the experiments, the bank is aiming to identify the potential benefits and risks associated with CBDC.
The Bank of France is launching a series of experiments to test the integration of a central bank digital currency (CBDC) for interbank settlements. It is inviting interested participants to submit their applications. According to an official document, the bank is planning to experiment with digital euro and explore the potential CBDC use cases for clearing and settlement of tokenized financial assets.
The central bank will be choosing a maximum of ten CBDC-related applications (individuals or groups). “Innovative nature” is said to be the main criteria for the selection process. Applications must be submitted by European Union-based applicants or in a state party to the European Economic Area agreement. The deadline for submitting applications is May 15, 2020, and the selection of applications will take place on July 10, the bank announced.
The CBDC experiment by the French central bank has three objectives – modeling CBDC-based interbank settlements, exploring benefits and identifying potential risks. The bank also outlined three potential CBDC use cases – payment against financial instruments, payment against other central banks’ digital currency and payment against digital assets.
The central bank highlighted that it will not be engaging in money creation within the upcoming experiment and will be destroying the token reflecting the amount in euros in digital form at the end of the accounting day on which payment was done. There are also currently no plans to apply this on a larger scale.
These experiments will act as a contribution by the Banque de France to a broader discussion within the Eurosystem, which will make any decision on whether to set up a CBDC. The tests are not intended to be continued on a long-term basis or applied on a wide scale by the Banque de France itself.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.