Today the Banque de France published its second paper on wholesale CBDC, following a dozen central bank digital currency (CBDC) experiments. The two primary use cases for an interbank CBDC are for securities settlement on DLT systems and cross border payments. Based on its experience, the bank outlined three potential models.
While other European central banks suggest DLT systems could be linked to existing payment systems for settlement, the French central bank acknowledges that a wholesale CBDC would enable atomic settlement or delivery versus payment in which the cash and the security exchange simultaneously. This removes the reconciliation process – a key friction that DLT addresses.
The central bank makes a number of of policy and technical recommendations. A need for interoperability and standardisation stand out as essential requirements, both for cross border CBDCs and for adopting DLT in the securities markets.
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