The epidemic has accelerated global CBDC research and development, and France and the United States want to speed up the launch of CBDC

On March 27, the Banque de France published a request for proposals for a central bank digital currency “experiment.” These projects will help the French central bank understand the risks and mechanisms of CBDC, and promote the further implementation of the French central bank's digital currency.

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France speeds up CBDC rollout

In fact, on December 4, 2019, the bank’s president, François Villeroy de Galhau, announced that the bank would start testing the digital euro project by the end of the first quarter of 2020. At present, the plan of France's CBDC has not been disrupted by the epidemic, and is still proceeding in an orderly manner. It is even possible to speed up the process due to the epidemic.

According to related reports, France’s CBDC project is divided into three phases, aiming to guide all aspects of France’s CBDC issuance, from designing digital currency to analyzing its impact and finally implementing operations.

There are three objectives, namely CBDC-based interbank settlement, identifying benefits, and analyzing potential risks. Among the three potential CBDC use cases, the Bank of France outlined payments against financial instruments, payments in other central bank digital currencies, and payments in digital assets.

The Bank of France has stressed that it will not undertake money creation activities in the CBDC experiment. Furthermore, the Bank of France noted that it will destroy the token representing the amount in euros in digital form at the end of the payment’s accounting day. At the same time it does not intend to implement any projects on a larger scale, noting: "These experiments will contribute to the broader discussions within the Eurosystem at the Bank of France, which will make a decision on whether to establish a CBDC. The Bank of France does not intend to These tests are not intended to be used on a large scale by themselves."

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U.S. "digital dollar" plan

The "digital dollar" is a tokenized legal tender issued by the Federal Reserve System, which is being conceived. It is a new digital form of the U.S. dollar, and along with traditional fiat currency, banknotes, and reserves, the digital dollar enjoys the full faith and credibility of the U.S. government like central bank money.

Calls have grown in recent months for the U.S. to begin developing a digital dollar, with Federal Reserve Chairman Jerome Powell saying he is studying the possibility of a central bank developing a digital currency. The Fed is also analyzing "the costs and benefits of implementing such a move."

Additionally, Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission (CFTC), recently established the Digital Dollar Foundation to design and develop a potential framework for a digital dollar.

According to Christopher Giancarlo, the digital dollar will become a liability of the Federal Reserve and form an integral part of the monetary base, while maintaining the effectiveness of monetary policy and financial stability and ensuring the forward-looking of monetary innovation. In addition, Christopher Giancarlo also mentioned that the digital dollar will comply with existing "know your customer/anti-money laundering" (KYC/AML) requirements and be distributed through regulated payment intermediaries and banks. The People's Bank of China's central bank digital currency "borrowed from". Global central banks are beginning to pay attention to central bank digital currencies.

Earlier this week, Democrats published draft Covid-19 stimulus bills in the U.S. Congress and Senate advocating the use of a digital dollar, or CBDC.

Affected by the epidemic, the US "digital dollar" plan has accelerated again. This also greatly exceeded the expectations of many people. Although the proposal was not passed, it also shows that the "digital dollar" plan is supported by some U.S. lawmakers. At present, the Digital Dollar Foundation has announced the establishment of a 22-member advisory group, which includes academicians and economics experts in financial technology, encryption, banking, capital markets, privacy, property rights, education, etc. will help establish the framework for a U.S. central bank digital currency (CBDC), while the Digital Dollar Foundation is responsible for researching potential applications for digital currencies.

The Digital Dollar Group has repeatedly stated that the U.S. should explore, test and experiment with a true U.S. dollar CBDC and broader digital infrastructure to improve U.S. future capabilities and resilience, but it is also important that this effort not delay the government’s response to the pandemic. Deploy critical emergency funds during the period using existing channels. The epidemic has made people realize the importance of financial infrastructure, so CBDC, which is closely related to inclusive finance, is an issue that the government should carefully consider.

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