French Central Bank CBDC Projects Aim to Manage DeFi Liquidity, Settle Tokenized Assets

The Bank of France is looking at a wholesale central bank digital currency that would be used by banks and financial markets.

AccessTimeIconSep 27, 2022 at 12:26 p.m. UTC
Updated May 11, 2023 at 5:09 p.m. UTC

The Banque de France Tuesday announced new projects to achieve the benefits of central bank digital currencies (CBDCs) used at a wholesale level by banks and financial markets.

“A wholesale CBDC could significantly contribute to improving cross-border and cross-currency payments,” Villeroy de Galhau, a governor at the Bank of France, the country's central bank, said in an appearance at the bank's digital currency conference. CBDCs at the wholesale level attract less attention than their headline-grabbing retail equivalent, he added.

One venture will look to improve CBDCs' liquidity management in decentralized finance (DeFi) – such as via automated market makers – which would play a role equivalent to that of investment banks that seek to sustain trading in a particular security, de Galhau said.

Another project will focus on issuing and distributing tokenized bonds on a blockchain, he said, building on previous findings about CBDCs being used to settle Web3 securities, such as the French central bank’s Project Jura.

Further details will be detailed in the coming weeks, he promised.

The European Central Bank is considering whether to issue a digital euro as soon as 2026, de Galhau said. The ECB is one of many central banks exploring the possibility of a CBDC for everyday use and for financial markets.


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Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.