Blockchain Revolution Series: French Central Banker Keen on Euro Payments via Blockchain Platforms

The European Union (EU) appears to be constructive on blockchain adoption in their financial system. 

The First Deputy Governor of Banque de France, Denis Beau, has recently recommended deploying distributed ledger technology (DLT) for euro payment settlements within the Eurozone.

At the Second Annual Capital Markets Technology and Innovation Conference, Denis Beau advocates the European Central Bank (ECB) that the European Central Bank (ECB) should be liberal in experimenting with distributed ledger technology (DLT) as a way of settling euro-denominated transactions.

Beau reckons that the blockchain-driven solutions can transform the financial industry, He adds on: “the tokenisation of financial assets combined with the recourse to blockchain-based solutions and more broadly Distributed Ledger Technologies to store and transfer those assets could help answering market’s demands.”

While EU has created a blockchain and artificial intelligence (AI) fund worth EUR 400 million. It is interpreted as a movement to keep up with innovation efforts of competitor countries such as the US and China.

The European Investment Fund (EIF) posted a blog on the 20th, saying, “the European Investment Fund and the European Commission have jointly raised a fund of EUR 100 million, and then attracted venture capital investors or other investors. "We will invest in chain and AI projects." 

The other highlights of Beau’s speech emphasizes on: The European market that cannot be considered in isolation and this will remain the case in the post-Brexit era. Innovation and growth benefit from open ecosystems. Risks in a digitalised world do not recognize borders. Ensuring a better coherence of national (or regional) regulatory frameworks in the world is therefore a key element for their effectiveness. Cross-sector and cross border cooperation is necessary. French initiative for a G7 cyber-attack simulation exercise or our contribution to the G7 working group on global stable coins are two recent examples of our commitment to this necessary worldwide cooperation. 

The Eurosystem, as a major provider of critical wholesale clearing and settlement services in euro, should be open to experimenting these innovations in order to revisit and possibly improve the conditions under which we make available central bank money as a settlement asset. We, at the Banque de France, have started gaining exposure and experience with those innovations and in particular DLT. We were the first central bank to develop, regarding the specific use of SEPA creditor credentials, a decentralised register system based on a blockchain infrastructure, the "MADRE" register. Of course, this is only a first step, which does not exhaust an extremely vast and diversified field of experimentation. One possibility often mentioned would be for us to issue a central bank digital currency to support wholesale clearing and settlement services on a decentralised basis using DLT. 

Hence, he commented that we, at the Banque de France, are quite open for experiments in that direction, together with the ECB and other central banks of the Euro-system, in particular with regard to a wholesale Central Bank Digital Currency.

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