The Banque de France has concluded that its wholesale central bank digital currency (wCBDC) could improve cross-border payments, settlement finality, and security for a variety of financial assets after conducting experiments using technologies that power crypto. Through these experiments, the Banque de France shows the operational feasibility and practical implementation of the three models it has conceptualized for issuing wCBDC directly on DLT [distributed ledger technology], the central bank said. The experiments have demonstrated that a wholesale CBDC would be key for native digital assets and tokenized assets that fall under the category of unlisted financial assets and which cannot currently be settled, according to the bank.
Central banks around the world are actively experimenting on CBDCs to improve wholesale settlements, with the Bank for International Settlements (BIS) leading multiple experiments. India has begun similar tests, while the European Central Bank is set to start in 2024. The French central bank said supporting Europe’s exploratory work will be one of the next steps.
The French central bank has identified several policy takeaways, including the need for interoperability for seamless data exchange, international cooperation, and public-private partnerships for a more inclusive global CBDC framework. Additionally, climate concerns highlight the need to develop energy-efficient solutions in the design of wholesale CBDCs.