The French central bank, Banque de France, has recognized the global significance of central bank digital currencies (CBDCs) and their potential in shaping a new international monetary system. Denis Beau, the first deputy governor at Banque de France, emphasized the need to consider cross-border issues in CBDCs from the very beginning, rather than as an afterthought.
According to Beau, CBDCs can act as a catalyst for improving cross-border payments, enabling the establishment of a new international monetary system. He believes that developing common standards and interoperability between wholesale CBDCs and existing systems is one path towards CBDC development. Another path proposed by the International Monetary Fund and the Bank for International Settlements involves creating regional or global CBDC platforms, where standardized wholesale CBDCs can be directly exchanged, facilitating payment versus payment and delivery versus payment transactions.
To illustrate the potential of CBDCs, Beau highlighted the example of Project Mariana, a collaboration between the Banque de France, the Monetary Authority of Singapore, and the Swiss National Bank. This project, which explored the possibilities of an automated market maker (AMM), concluded successfully in late September.
Beau also addressed the tokenization of finance, expressing his belief that the public sector should support the private sector to fully leverage the potential of blockchain technology while managing associated risks. He emphasized that tokenized central bank money availability and tokenized assets should be viewed as allies rather than competitors.
The adoption of CBDCs has become a topic of interest for central banks worldwide, with many countries exploring the potential benefits and challenges. Proponents argue that CBDCs can enhance financial inclusion, reduce transaction costs, and increase efficiency in cross-border payments. However, concerns around privacy, security, and monetary policy implications remain key considerations in the CBDC discussion.
As Banque de France embraces the global perspective on CBDCs, it is clear that the development of a new international monetary system will require collaboration and cooperation among central banks worldwide. While CBDCs hold promise, it is essential to address the aforementioned challenges and ensure that any implementation is carefully designed to achieve its intended goals.
