At a conference organized today by the Banque de France, EU Commissioner Mairead McGuinness said the Commission plans to propose legislation for a “possible” digital euro in 2023 to allow the European Parliament and Council to debate it.

Work on the digital euro is currently in the prototyping phase, with Banque de France Governor François Villeroy de Galhau confirming that a decision on whether to proceed would be made by the end of 2023, with a possible launch in 2026. or 2027.

While work on a euro central bank digital currency (CBDC) has focused on the retail side, earlier this week the ECB confirmed that it is also considering a wholesale CBDC for interbank payments.

More details on a possible digital wholesale euro

“If commercial banks expect distributed ledger technology to be part of an enhanced payment infrastructure, then we should certainly be open to it and be prepared to support distributed ledger technology as part of this infrastructure mechanism,” the chair said. of the European Central Bank (ECB), Christine Lagarde. .

An important difference between a wholesale CBDC and a retail CBDC is that central banks already provide digital money to commercial banks, but do not use blockchain. Therefore, there are no regulatory obstacles to a launch.

Speaking about the timing of a CBDC, the French central bank governor observed: “This moment could come sooner than expected with the next entry into force of the so-called European Pilot Regime in early 2023. This new regulation offers a unique opportunity for the Eurosystem”.

He was referring to legislation allowing security tokenization pilots, which allow exemption from certain regulations. These include restrictions on exchanges that deal directly with consumers and the removal of segregation of trading and post-trading functions, which can occur on the same ledger.

The Banque de France conducted nine wholesale CBDC experiments over two years and recently said it would do more. Today, Governor Villeroy de Galhau said that he plans another three CBDC wholesale experiments. Two will focus on cross-border payments, including CBDC interoperability and liquidity management tools using DeFi or automated market making (AMM) specifically.

The French central bank previously conducted similar AMM experiments with the Monetary Authority of Singapore using the AMM for foreign exchange (FX) transactions. A key benefit is the potential for 24/7 FX transactions and payments. The governor said an improved MMA would be tested.

Previously, it also conducted cross-border CBDC trials with the Swiss National Bank. The third new French test will involve the use of a CBDC to settle the issuance and trading of tokenized bonds. The Bank previously provided a wholesale CBDC for the European Investment Bank’s €100 million bond issue on the Ethereum blockchain.