France’s central bank opens applications for digital currency experiment
The central bank of France has called on fintechs to apply for its central bank digital currency (CBDC) experiment which will test the integration of a tokenised financial asset.
The pilot has three main objectives: to explore different technologies which can facilitate “conventional” use cases of a CBDC, to show how a CBDC would innovate the banking industry, and to analyse the effects of a CBDC on financial stability and regulation.
Applicants must be based in the European Union or in the European Economic Area, and have to put together a proposal on one of three specific use cases the central bank is exploring.
These use cases will all be payments by means of a token representing central bank money, against a) the delivery of a listed or unlisted financial instrument, b) a digital currency of another central bank, and c) digital assets, which are defined as “the service of purchasing or selling digital assets against currencies having legal tender”.
“The Banque de France will not engage in money creation in the context of these experiments,” the published paper reads.
“The token reflecting the amount in euros in digital form will be destroyed at the end of the accounting day on which payment was made.”
Applications are due by 15 May 2020, ahead of interviews which will begin in June before final selection on 10 July.
The bank says it will provide the token, based on central bank money, after the technology is decided on for each use case.
“In this regard, the Banque de France does not intend to favour a specific technology,” the paper reads.
The application opening follows a speech by the Banque de France’s governor François Villeroy de Galhau from back in December 2019.
He said: “We as central banks must and want to take up this call for innovation at a time when private initiatives – especially payments between financial players – and technologies are accelerating, and public and political demand is increasing.”