Central Banks all around the world are paying intense attention to the concept of Central Bank Digital Currencies (CBDCs). Although there are ongoing crypto restrictions in the country, the Bank of Russia recently declared that it prefers a digital Ruble above a proprietary stablecoin.
Banque de France is now also looking toward a fully operational wholesale digital asset by the beginning of 2023.
François Villeroy de Galhau, Governor of the France Central Bank, stated that the Government has already granted a go-ahead on the second phase of experimentation with a wholesale CBDC.
At the 2022 Paris Europlace International Financial Forum, Galhau mentioned,
“We want to get closer to a viable prototype, testing it in practice with more private actors and more foreign central banks in the second half of 2022 and in 2023. This work ensures that we stand ready to bring central bank money as a settlement asset as early as 2023.”
In contrast to a conventional retail CBDC, a wholesale CBDC is only used by financial organizations to trade fiat currencies.
It does not involve public use as a medium of exchange for goods and services. Hence, right now, it is only moving towards an institutional CBDC. However, the Central Bank has mentioned that they are also exploring a retail CBDC in the future.
The Governor added that retail CBDCs will be launched with the assistance of private banks.
“The Eurosystem should entrust banks with the distribution of digital euros to final users while setting technical, functional and commercial rules – for example, the branding, logo and fee structure,” he said.
The primary goal of the CBDCs is to streamline international and domestic banking transactions. The first stage of the experiment took place in December 2021 and involved the blockchain-based issuance of a digital bond and CBDC settlement.
With decentralized digital assets losing popularity amongst policy markers, Central Banks are doubling their efforts in building their own digital currency. In fact, the Deputy Governor of the Reserve Bank of India went as far as to state that CBDC would mark the end of other crypto assets. While it is too early to confirm such an assumption, only time will tell if CBDCs can impact the potential of the existing digital currencies.