French central bank gears up for digital currency testing
The tests aim to find out how a euro CBDC could work among other digital assets and other CBDCs.
The central bank of France has published a call for applications for organisations interested in contributing to its digital currency experiments.
Essentially it's opened the door for organisations to start applying to develop and carry out digital currency experiments.
It's hypothesised that digital currency could bring many benefits.
To better put that to the test, the central bank is looking for experiments that allow for an initial assessment of the possibilities offered by new technologies in transactions relating to financial assets.
These financial assets can include existing financial instruments, as well as new assets.
It's intended that experiments look at use cases including making payment in central bank money against delivery of financial instruments, payment of one central bank digital currency against that of another central bank and payment in central bank money against digital assets.
The central bank is also looking for experiments that explore the potential impacts of a central bank digital currency on the money markets, with a special eye to how the 24/7 always-on nature of CBDC could change things.
Experiments should also probe existing legal and regulatory frameworks for potential issues.
It should also allow the central bank to assess the possible consequences of throwing a CBDC into the existing market mix, and assess the productivity gains for the financial sector and the wider economy, along with the macroeconomic, financial and legal consequences of introducing a CBDC.
While the bank has not dictated any particular technological requirements, innovativeness is a selection criterion, and it goes out of its way to say that the technical capacity to process large operational volumes will not be examined as part of these requirements.
This suggests a willingness to consider less-mature technologies like blockchain.
Furthermore, one of the use cases to be tested is the exchange of CBDC for other digital assets, which includes cryptocurrencies such as Bitcoin.
On the whole, it looks like everyone's expecting the world to change very fast under the influence of digital assets, including both CBDCs and "traditional" digital currencies like Bitcoin.
Disclosure: The author holds BNB, BTC at the time of writing.
- Ethereum price breaks all time high of US$1,448
- Ethereum price: Massive slide as market faces bearish pressure
- Ethereum 2.0: Roadmap, timeline and implications
- Bitcoin falls to US$34,000 as confidence in money markets improves with the Biden inauguration
- Bitcoin price lags while regulators raise fears and banks grapple