France plans to become the first country in Europe to launch a sovereign digital currency. The Central Bank of France announced on 28th April 2020 that it had successfully tested a central bank digital currency (CBDC) for interbank settlement.
The Bank of France aims to explore the potential benefits of a CBDC to improve the efficiency and security of the French payment system and to support financial inclusion. However, they have stated that a digital euro would not replace cash, but would rather complement it.
The announcement marks a significant milestone as the European Central Bank has previously shown reluctance towards issuing its own digital currency due to concerns around the potential impact it could have on the traditional financial system. Nevertheless, the Bank of France is pushing forward and plans to conduct further experiments in the coming months.
In summary, France has successfully tested a CBDC for interbank settlement purposes and is now looking to explore the potential benefits of a digital currency. While the Bank of France has stated that a digital euro would not replace cash, it could complement it and help improve the efficiency and security of the French payment system. This announcement is notable as the European Central Bank has been reluctant to issue its own digital currency, but the Bank of France appears to be pushing ahead with further experiments.
