France looks towards use of digital currency and blockchain services

France is exploring the use of digital currency and distributed ledger technology (DLT) to help create new opportunities for the financial market.

The development comes following a speech from the country’s first deputy governor Denis Beau regarding innovation in Europe.

He explained that current regulations were established long before the technology we are currently seeing sweep across the financial market, such as blockchain and digital currency, was created. While there are risks with the technology, Beau believes countries should make adjustments to the regulations, so innovation is not stunted.

He said, “We should contribute to providing the market with a sound, adapted and updated regulatory framework, which is, in my opinion, needed to support innovation, and even to foster it.”

One of the developments Beau sees the market calling out for is a new cross-border payment system which could replace slow banking model currently used. Instead, Beau suggests the use of blockchains and distributed ledger technology to store and transfer assets.

This could also solve the current limits of the existing wholesale market infrastructures.

However, there are still risks which could arise from this and could lead to disorderly approaches and dissimilar adaptions of market infrastructure.

Beau said, “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.”

One possibility suggested by Beau is the creation and issuance of a central bank digital currency to support wholesale clearing and settlement services on a decentralised basis through the use of DLT.

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