Bank de France Unveils Findings of wCBDC Experiment: Blockchain Enhances Financial Stability
• Bank de France has unveiled the outcomes of its wholesale central bank digital currency (wCBDC) trial.
• The experiments led to several key takeaways, addressing both policy and technical aspects of wCBDC implementation.
• Leveraging blockchain technology could enhance trade and post-trade activities’ straight-through processing and contribute to overall financial stability.
Bank de France’s Wholesale CBDC Experimentation
Bank de France has released the findings of its wholesale central bank digital currency (wCBDC) trial, which was conducted over a three year period in collaboration with various European central banks, commercial banks, and fintech partners. The experiment sought to test different models for issuing wCBDCs and explore how these currencies could impact different areas of the financial system.
Key Takeaways on Policy & Technical Aspects
The experimentation yielded several key takeaways concerning both policy and technical aspects of wCBDC implementation. It was found that issuing a wCBDC alongside a retail CBDC (used by retail consumers for small-scale transactions) could preserve the value of government-issued digital money for both retail and wholesale payments. The Banque de France also noted that blockchain advancements offer central banks various means to maintain control over their wholesale CBDC systems while advocating for technological neutrality and adopting common standards.
Benefits of Tokenizing Central Bank Money
Tokenizing central bank money via blockchain technology could significantly improve cross-border payments and settlement security for a range of financial assets, from government bonds to fund shares. Additionally, the Banque de France tested their Distributed Ledger for Securities Settlement System (DL3S) blockchain which could enhance trade and post-trade activities‘ straight-through processing as well as contribute to overall financial stability.
Climate Related Concerns in Designing WBCD
The experiments also highlighted the importance of developing energy efficient solutions to address climate related concerns when designing a wBCD system.
In conclusion, Bank de France’s experiments have provided valuable insights into how wCDBCs can be used effectively in Europe’s banking system while providing an opportunity to address climate change concerns through technological innovation.