France Jumps on Crypto CBDC Bandwagon
Central bank digital currencies (CBDCs) are gaining wider acceptance by the day. While only 9 countries have launched crypto CBDCs, 14 are in the pilot stage, 16 are developing technology and 40 are conducting research – in all, 87 countries are exploring CBDC technology – the race for the future of money is well and truly on.
France is the latest country to join the discussion, as it completed the first stage of CBDC experimentation on Thursday (16th December). That said, what exactly is a CBDC?
What is a CBDC?
A CBDC is essentially a digital form of fiat currency issued by a central bank. It can be in the form of a retail currency or a wholesale currency. A retail CBDC is intended for public use while a wholesale CBDC is meant to serve as a medium of exchange between financial institutions.
Both forms of technology are backed by the full credit of a government. CBDCs will make purchasing goods, sending local and cross-border payments and layering possibilities on transactions much easier, among other possibilities.
While private cryptocurrencies offer these capabilities in several shapes and forms, they are decentralised, not centralised and controlled by a government.
France's CBDC quest
On Thursday, The Banque de France completed the first stage of wholesale CBDC experimentation. The next step is exploring cross-border transactions. Interestingly, France has been exploring wholesale CBDC technology since March 2020.
France conducted experiments with numerous partners, including HSBC, the final stage of which was issuing a digital bond on a blockchain with settlement in wholesale CBDC. The Banque de France is exploring a retail CBDC as well.
As private crypto assets are gaining prevalence and people are avoiding the use of cash (apps like Google Pay and Cash App are being increasingly used), governments all over the world are looking at CBDC technology to combine the power of crypto with the craze of digital currency.
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Author: Surajdeep Singh
Surajdeep Singh is the marketing director at NFT Contemporary and has been working as an IT and blockchain journalist since 2018. He is a contributor to publications including IT Business Edge, Enterprise Networking Planet, eSecurity Planet & Moni Talks and works as a consultant at Drofa Communications Agency.