Bitcoin and other ‘crypto assets’ excluded from Central Bank experiments

France’s central bank is about to carry out a series of radical experiments whose lessons could be used to change the way money works. Cryptocurrency will not be included. In a statement from the Banque de France, the nation’s central bank, which works together with the European Central Bank to determine the continent’s monetary policy, the institution released the names of eight participants in the experiments and the scope of the work today. .

Participants are consulting the giant Accenture
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, the giant of the settlements Euroclear, the HSBC bank, the French firm, Iznes, the etheruem platform LiquidShare, the little-known startup, ProsperUS, the crypto bank Seba and Forge, the spin-off of Societe Generale’s digital capital markets. The broad parameters of the experiments include everything from testing regulation using digital currency to improve cross-border payments, an analysis of how a central bank digital currency should be available and, more importantly, “exploring new methods of exchanging financial instruments (excluding crypto) -assets) for central bank money. ”

The statement by one of the world’s leading central banks shows how the flaunted institutions are struggling to learn the best that cryptocurrency and its underlying blockchain technology have to offer, but only within limits. Neither blockchain, the shared ledger that allows bitcoin to exist, nor the most sanitized word to describe the broadest group of technologies, distributed ledger technology, were mentioned by name in the statement. As such, the work also helps define the limits of what any actual adoption of the technology would look like.

“The strong mobilization around this call for candidates testifies to the interest of finance and technology actors in this approach with the aim of exploring the possible contributions of digital money issued by the central bank to improve the functioning of markets financial, in particular the interbank regulations “, According to a Google
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translation of the declaration. A representative of the Banque de France declined to share any additional context.

In the next few days, the Bank of France will begin conducting experiments on each of the candidates, according to the statement, and some of the projects are expected to take several months. Candidates were asked to respond to the bank’s request to request CBDC experiments by May 15. The experiments could have far-reaching implications for decision-making processes for the central bank, which in addition to helping define Europe’s monetary policy and implement it in France regulate France’s banks and insurance companies and ensure the management of risks.

However, beyond the limits of France, the lessons learned from the central bank’s digital currency experiments will contribute to international work led by the Eurosystem, the monetary authority of the European Union. Earlier this month, the bank joined the German central bank, the Deutsche Bundesbank and the European Central Bank in jointly organizing a new innovation center in Europe under the Innovation Center of the Bank for International Settlements.

In May, the European Central Bank executive board member Yves Mersch confirmed in a speech at the Consensus industry conference, that the European Central Bank was one of at least 66 central banks that explored how the lessons learned from blockchain they could change the very structure of what we consider money.

For example, China’s central bank, the People’s Bank of China, has tapped into a giant first-move advantage in space, starting its CBDC experiments years ago and currently testing a functional implementation. If successful, a side effect of CBDCs could be borderless transactions, possibly giving people the option to store Chinese Renminbi in addition to, or instead of dollars, as the global reserve currency,

Based on what we know from almost ubiquitous experiments around the world analyzing the nature of CBDCs, some of the other possible changes in the way money works could include accounting to citizens at central banks, which makes them Lets you occasionally bypass commercial banks and directly receive access to stimulus controls and more. Another possible, but controversial side effect of central bank digital currencies could allow online payments while maintaining the privacy citizens have historically enjoyed with cash.

Skeptics of the CBDC concept argue that as long as central banks continue to have the authority to print or issue almost unlimited amounts of the currency, the underlying problems of inflation will continue to push people into more distributed deflationary alternatives, such as Bitcoin, which has a fix. quantity. Other skeptics point out that central banks are unlikely to actually allow citizens the same privacy they have in the real world, online, and could use technology as a way to track the spending habits of their own citizens.