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Edited by qqqpeter at 2019-12-6 22:32

Banque de France (Central bank of France) announced on December 4th the speech of the French central bank governor, François Villeroy de Galhau on digital currencies and innovative payments. French banks will test digital currency (Central Bank Digital Currency, CBDC) next year, and they are the first in Europe Banks have announced that they will test the central bank's digital currency.

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Bank of France also confirmed the message on official Twitter, Villeroy said,

We must contribute to this innovation in a serious and methodical manner. I think we should accelerate the issuance of at least one CBDC in order to become an internationally leading issuer; and benefit from the provision of demonstration CBDCs.

This announcement was made at a conference co-sponsored by the two major financial regulators in France, the French Prudential Supervision and Resolution Authority (ACPR) and the French financial industry (Autorité des marchés financiers (AMF). Villeroy said,

The digital revolution allows us to benefit every day from its continuous and substantial progress, but at the same time it raises fundamental questions about bank intermediation and even our currency sovereignty. We should conduct thorough research on these issues and answer them through two cores of our strategy: maintaining confidence and supporting innovation.

Two Types of French digital currencies

Ambitious French central bank governor says that French banks will undergo restructuring, and he intends to create a new "Infrastructure, Innovation and Payments Directorate (DIIP)", where blockchain technology is likely to play a role in the plan. Villeroy said that the goal of DIIP is "to quickly start experiments and start project testing by the end of the first quarter of 2020".

We are particularly passionate about participating in the innovation of" wholesale "CBDCs for the exchange and settlement of" tokenized financial assets ".

Villeroy said, saying that such actions will naturally contribute to the work of the euro system.

It is worth noting that the French central bank is trying to create two different CBDCs. One is a "wholesale" currency that uses blockchain technology and all its possible applications (especially smart contracts) to allow payments between financial institution participants; The other is a "retail" currency that the general public uses daily for retail transactions, which may not use blockchain technology.

Villeroy emphasized that the two different CBDCs "coexist."

In the face of emerging currency types, he also said that financial intermediaries will be able to play a front-line supervisory role in CBDC, especially KYC and transaction monitoring expertise, which will be where traditional financial institutions can play a role.

CBDC Three Goals

In his speech, Villeroy pointed out that for the CBDC, he hopes to achieve three major goals:

  • Maintaining trust in the financial system
  • Improve operational efficiency and reduce agency costs
  • Defend sovereignty against digital currencies in the private sector such as Libra

The first point is related to the rapid decline in "cash use". Countries such as Sweden want to ensure that all citizens have access to central bank funds. The CBDC will help maintain trust in the financial system. Generated by the ability to exchange assets for fiat currency.

The second point is to hope to generate through the "tokenization" of the central bank's currency, hoping to increase flexibility, efficiency and reduce intermediary costs through tokenization, especially after settlement and post-trade activities. Field, which coincides with one of JP Morgan's JPM coin goals.

The last point is mainly due to political considerations. Villeroy pointed out that the establishment of CBDC in France and Europe can provide strong leverage to enable it to maintain the sovereignty of the national public sector when facing the private sector such as the Libra Libra project One of the key points highlighted by the People's Bank of China's implementation of the Digital RMB (Digital Currency Electronic Payment, DCEP).
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