The Banque de France said it completed the first stage of its experiments into a wholesale central bank digital currency (CBDC) and plans to move on to the next phase, focusing on cross-border payments.

• France’s central bank has been exploring the use of a CBDC for the exchange of money between financial institutions since March 2020.

• The final stage of the first tranche of experiments consisted of the issuance of a digital bond on a blockchain with settlement in CBDC, which was conducted with numerous partners, including banking giant HSBC.

• “The experiment successfully tested an end-to-end transactional lifecycle of digital assets,” Banque de France said Thursday. “All transactions occurred across different blockchain environments operated by HSBC for the custody of the assets, and by the Banque de France for the securities settlement and the CBDC.”

• Central banks across the world are exploring the development of digital currencies, in part to address the decline in the use of cash just as interest in private cryptocurrencies is gathering steam. Exploration of wholesale CBDCs is, however, confined to a smaller group attempting to use a CBDC to address some of the inefficiencies and complications of exchanging central bank money between financial institutions.

• A wholesale CBDC is a digital currency issued for use by financial institutions to exchange central bank-issued money. It is different from a retail CBDC, which is intended for use by the public as a form of digital cash.

• The Banque de France is also exploring a retail CBDC as part of the European Central Bank’s broader work on the potential development of a digital euro.

Read more: Swiss Central Bank Ready to Run With wCBDC in January: ‘Just Takes a Policy Decision’