The central bank of France wants the eurozone to build a blockchain-based settlement system that will move euros more quickly and at less cost than with existing technologies.
In a speech Thursday, First Deputy Governor Denis Beau issued some of France’s strongest comments yet in support of distributed ledger technology (DLT), which he said likely solves many outstanding market issues.
One solution France is considering: a central bank digital currency (CBDC). Beau said the eurozone has a responsibility to at least consider a CBDC – especially because other “disorderly approaches and heterogeneous adaptations” could arise in its absence.
Cross-border payments also could be a particularly viable DLT use case, Beau said. Residents in the EU and beyond often wait extended periods for payments to wend between banks and their international partners, in the “correspondent banking model” that delivers an often insecure service for what he said was a high price.
Tokenized assets may give that method a jolt, he said. Combined with DLT, tokens could seamlessly move funds and “help in answering market’s demands,” Beau said.
Banque de France has been one of the most outspoken advocates for DLT. In October it began searching for a blockchain analyst to help it design a digital currency implementation program. And it was the first central bank in the world to develop a blockchain registry system, according to Beau.
“As a major provider of critical wholesale clearing and settlement services in euro, [the Eurozone] should be open to experimenting these innovations in order to revisit and possibly improve the conditions under which we make available central bank money as a settlement asset,” Beau said last week.
“We, at the Banque de France, are therefore quite open for experiments in that direction, together with the European Central Bank (ECB) and other central banks of the Eurosystem, in particular with regard to a wholesale CBDC,” he added.
The ECB may well be experimenting already. It named a new chief for its fintech-focused “Innovation Hub” in early November, issuing at the time a mandate that the hub “foster international collaboration among central banks on innovative financial technology.”
But the European Union’s presidency has been more hesitant. It shot down rumors earlier this month that it wanted to issue its own stablecoins, saying it was only interested in regulating them, not making its own.