CBDCs: A Foundation for a New Global Monetary System
Denis Beau, the first deputy governor of Banque de France, believes that Central Bank Digital Currencies (CBDCs) should serve as the foundation for a new global monetary system. He emphasizes that CBDCs should be developed not only for local financial settlements but also to improve cross-border payments. According to Beau, CBDCs can catalyze the build-up of this new international monetary system.
Mapping Out Utility for Global Payments
Beau suggests that CBDCs should prioritize their utility in facilitating global payments from the very beginning. He stresses the need for synergy between the private and public sectors to effectively deploy tokenized assets in France. Despite acknowledging the risks posed by cryptocurrencies, he believes that blockchain technology should be harnessed to its full potential, particularly in terms of tokenization.
Banque de France’s CBDC Model
Banque de France is committed to promoting global settlements and interoperability among different platforms through CBDCs. According to Beau, effective CBDC models involve creating synergy between wholesale and traditional approaches and aligning with established models from institutions like the Bank for International Settlements (BIS) and the International Monetary Fund (IMF). The development of CBDCs on a broad scale would also integrate an automated market maker (AMM) across all participating nations.
French Authorities’ Stance on Digital Asset Regulation
French authorities maintain strict regulations on digital assets following industry collapses and scams. Although the Markets in Crypto Assets (MiCA) regulation will take effect next year in Europe, Beau argues that regulation limited to one jurisdiction is insufficient. He calls for wider global support in regulating digital assets effectively.
Project Mariana: A Collaborative Experiment
Beau highlights Project Mariana, a joint effort between Banque de France, the Swiss National Bank, and the Monetary Authority of Singapore. In collaboration with the BIS, these central banks conducted tests on payment settlement and cross-border utilities using hypothetical virtual currencies. The experiment successfully utilized a token standard on a chosen blockchain across multiple networks and a decentralized exchange for trading. However, the participating banks clarify that Project Mariana is purely experimental and does not indicate any intention to issue CBDCs or endorse specific technological solutions.
Hot Take: CBDCs Paving the Way for Global Financial Transformation
Denis Beau’s vision of CBDCs as the foundation for a new global monetary system reflects the growing recognition of their potential in revolutionizing cross-border payments. By prioritizing utility for global payments and leveraging blockchain technology, CBDCs can enhance financial efficiency and promote international cooperation. However, it is crucial to establish effective regulatory frameworks that extend beyond individual jurisdictions to ensure secure and transparent digital asset transactions worldwide.
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