France’s Central Bank Governor Reveals Use-Cases of CBDC Including Tokenized Bonds
France’s Central Bank governor recently spoke about the potential use cases of wholesale central bank digital currency (CBDC) in the financial markets, and announce new projects to take advantage of these opportunities. The governor of France’s central bank said a wholesale CBDC “could significantly contribute to improving cross-border and cross-currency payments.”
Wholesale CBDC Could Improve Cross-Border and Cross-Currency Payments, Says France’s Central Bank Head
During its digital currency conference Tuesday, the Banque de France outlined several new initiatives to seize the opportunities presented by a wholesale central bank digital currency (CBDC). Villeroy de Galhau, Governor of the Banque de France, believes wholesale CBDCs carry the vast potential to enhance the payment system.
“A wholesale CBDC could significantly contribute to improving cross-border and cross-currency payments,” he said. Furthermore, wholesale CBDCs also draw less attention than their retail counterparts, added de Galhau.
He said that one of the new projects will focus on refining the CBDC’s liquidity management in the decentralized finance (DeFi) space through solutions like automated market makers. These market makers would act similarly to investment banks when attempting to sustain trading in certain assets.
In another project, the Banque of France plans to issue and distribute blockchain-powered tokenized bonds. The move comes after the bank previously explored CBDC’s use cases in settling Web3 securities.
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Digital Euro Could Launch a CBDC in 2026
While France seems determined to take advantage of CBDCs in the future, the European Central Bank (ECB) is also considering digitizing the euro, which could be rolled out in 2026, said de Galhau. The ECB has been previously concerned about how would the digital euro affect citizens’ privacy.
China remains one of the leaders concerning this matter, with its digital yuan project running across a number of cities. China has been also offering loans in digital yuan to help local businesses but also to increase its oversight.
However, more nations have been joining the CBDC hype in the past few months. In its first-ever crypto regulation framework published earlier this month, the White House has explored the potential advantages and disadvantages of a CBDC. Similarly, Australia launched a one-year research program to investigate the use cases and business models of a CBDC.
Hong Kong also announced plans to roll out a wholesale CBDC in the next 2-3 years. The city’s central bank believes “e-HKD has the potential to make payments more effective while supporting the digital economy.”
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