France starts with the second phase of its CBDC project

The first tests of the first phase in the Bank of France’s trials for a wholesale digital euro have been completed. But now it has been announced by François Villeroy de Galhaula who is the governor of the Bank of France that the second phase of the tests is expected to start this year.

They commented at the Europlace International Financial Forum in Paris that four or five new experiments are expected to be launched.

The European system is looking at the scope and design of a central bank cryptocurrency (CBDC) in euros. The rationale is that a retail digital euro can maintain the role of central bank money in the economy even when it is “threatened by the digital revolution,” Villeroy de Galhau continued.

“I believe that the Eurosystem should not have the role of managing digital euro holdings: the Banque de France closed its last private client accounts more than 20 years ago, and has no intention of reopening any.”

The Banque de France’s proprietary technology for its digital ledger is referred to as DL3S, for a possible future system. An automated market maker platform based on a decentralized financial model was also designed, where multiple CBDC settlements will be possible.

Further testing will be to see how the digital euro performs with private agents and other central banks, preparing to implement it in the pilot scheme in 2023.

Again we see a nation betting on the digital world, hopefully, these tests will prove positive so that many more countries will be interested in leaping to have their fiat currencies converted into digital assets.