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The Central Government of France is finally giving wholesome central bank digital currency (CBDCs) the green light after it conducts the second experiment on it. It has been dealing with the CBDCs implementation decision for a long time and now is determined that CBDCs will improve its cross-border payments. The Banque de France has just released a new set of findings and lessons gained about the first and second tranches of its wholesale CBDC experimentation program, which was started in March 2020 and consists of twelve trials.
Are Wholesome CBDCs A Key To Digital Assets In France?
The results of the experiment contribute to the Eurosystem’s exploratory effort, which began in April 2023. It was to investigate how wholesale financial transactions recorded on DLT platforms might be settled in central bank money.
According to the bank that conducted the research, a wholesale CBDC would “be critical for native digital assets and tokenized assets that fall under the category of unlisted financial assets and cannot currently be settled.”
According to the policy takeaways given in the report, the introduction of a Wholesale CBDC alongside a Retail CBDC will improve monetary stability and universality. It ensures that the value of central bank money remains stable for both retail and wholesale payments, and it simplifies the conversion of different types of private money.
The Central Bank also informed that seamless data and transaction exchange between Distributed Ledger Technology (DLT)-based and conventional infrastructures should be a priority to ensure efficient functioning and compatibility of Wholesale CBDC systems.
Banque de France’s experiments showed that a tokenized form of central bank money could improve cross-border payments, settlement finality, and security for a wide range of financial assets, from government bonds to fund shares. A wholesale CBDC would thus be critical for unlisted financial assets such as native digital assets and tokenized assets that cannot currently be settled via the existing TARGET Services.
Also Read: Ripple Seeks Approval Of Licenses In UK And Ireland After XRP Win Against SEC
Rising Importance Of CBDCs In The World
Central banks throughout the world are currently experimenting with CBDCs to improve wholesale settlements, with the BIS leading many projects. Similar testing has already begun in India, and the European Central Bank plans to begin in 2024. One of the next stages, according to the French central bank, will be to support Europe’s exploratory work.
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