Home Cryptocurrency EU Plans for Wholesale Digital Euro Out Within Weeks, French Central Bank’s Villeroy de Galhau Says

EU Plans for Wholesale Digital Euro Out Within Weeks, French Central Bank’s Villeroy de Galhau Says

by Harry Garcia

Euro area central banks are accelerating plans to introduce a wholesale central bank digital currency (CBDC) in an effort to modernize the settlement of securities and foreign exchange transactions. The governor of France’s central bank, François Villeroy de Galhau, announced that the Eurosystem is exploring new technologies for the settlement of central bank money, including the issuance of a tokenized CBDC.

While the development of a digital euro for everyday citizens has raised concerns about privacy and its impact on commercial banks, the wholesale CBDC plans seem to be progressing at a faster pace. Villeroy de Galhau stated that the eligibility criteria and call of interest for the wholesale CBDC will be published in the coming weeks, with experiments and trials scheduled for next year, including real transactions.

A permissioned network incorporating smart contracts would enable central banks to maintain control over the supply of money to the economy, a crucial responsibility for managing inflation and financial stability. Villeroy de Galhau also mentioned that the central bank is exploring alternative protocols, blockchains, and its proprietary Distributed Ledger for Securities Settlement System, DL3S.

Earlier this year, the European Central Bank (ECB) discussed wholesale CBDC plans during industry meetings and is now starting trials for wholesale settlement. In contrast, the retail CBDC concept, which has faced political opposition, is currently being debated by lawmakers who are still in the process of addressing legislative concerns.

Several cross-party EU lawmakers recently sent a letter to the ECB, urging them to postpone decisions on a retail CBDC until new legal constraints could be agreed upon. Signatories of the letter include notable figures such as the Netherlands’ Michiel Hoogeveen, former Belgian Finance Minister Johan van Overtveldt, and Markus Ferber, the economic spokesperson for the European People’s Party, the largest center-right political grouping in the EU.

The acceleration of the wholesale CBDC plans reflects the desire of euro area central banks to embrace digital innovation and leverage technology to enhance financial transactions. As experiments and trials unfold, these initiatives are expected to shape the future of central bank money settlement and contribute to a more efficient and modern financial ecosystem in the euro area.

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