France’s central bank has concluded that further examination of wholesale central bank digital currencies (CBDCs) is needed following its initial experiments.
- The Banque de France’s experiment commenced in March 2020, with results published Monday.
- “We have demonstrated that a wholesale CBDC would be of benefit for cross-border and cross-currency payments as it would improve the efficiency of processing chains,” said Nathalie Aufauvre, head of the bank’s experimentation program.
- However, further examination is required of important questions pertaining to the role of financial intermediaries and the transmission of monetary policy, according to the Banque de France.
- “It is essential, therefore, that central banks retain full control over a wholesale CBDC once it has entered circulation.”
- A wholesale CBDC is a digital currency issued specifically for use by financial institutions to exchange central bank-issued money. In this sense, it is distinguishable from a retail CBDC that would be intended for use by the public as a form of digital cash.
- The Banque de France is also exploring a retail CBDC as part of the European Central Bank’s broader work on the potential development of a digital euro.