- During a conference held by the ACPR, the Banque de France announced they were running tests to craft a Central Bank Digital Currency (CBDC).
- Goal: test an interbank virtual currency likely to help run experiments on a potential “e-euro“.
- The Banque de France didn’t disclose information regarding the technology they may be looking into. The idea would, however, be to create an e-euro, the issuing mechanisms of which could rely on technologies such as the Blockchain.
- To achieve this goal the Banque de France intends to work with industry innovators from the private sector their Lab. They plan on transforming their internal organisation and implementing a directorate for infrastructure, innovation and payments (DIIP).
- This aims at starting their first experiments fairly soon and will be launching a call for projects before the end of Q1 2020.
- European sovereignty. After they issued several warnings regarding Bitcoin, the Banque de France claims they do not stand against the principle of digital currency as long as it is issued by an institution. France aims at standing out as a pioneer in the field of public cryptocurrencies. Issuing at least one CBDC would enable them to become the first issuer globally while making the most of the advantages entitled to a reference central bank digital currency.
- Several advantages. An EU-wide virtual currency could be a relevant lever to stress European sovereignty as Tech giants keep gaining ground, including Facebook with Libra. It would also contribute to increasing efficiency and reducing intermediation costs.
- Digitalising a central bank currency could, however, have a negative impact on liquidity, profitability and bank intermediation. A thorough analysis of the potential value of a CBDC and optimised development will then be required.
- The Banque de France was among the first central banks launching their own Blockchain for processing SEPA creditor credentials.
- And they would become the first central bank in Europe introducing such an initiative. In 2017, Sveriges Riksbank (the Swedish central bank) looked into a state virtual currency called e-krona, but work is still underway. People's Bank of China is also working on their own digital currency.
- Work was also announced in the private sector, including by Facebook with Libra (unveiled in June 2019). And in February, the American group JPMorgan launched JPM Coin.