As the latest reports show, the digital currency issued by the French central bank will be tested at the beginning of the next year. As a consequence, France is taking the lead in the race to issue the first digital currency of the central bank.
France with its own digital currency as the first country in the world (perhaps)
According to the Les Echos, the French central bank, i.e. the Bank of France (fr. Banque de France) intends to launch a pilot program for the Central Bank's Digital Currency (CBDC). The head of the Bank of France, François Villeroy de Galhau, announced that the bank will start testing the digital euro project by the end of the first quarter of 2020.
While officially confirming it on Twitter, The Bank of France highlighted that it has already been announced before, at a conference co-organized by the main French financial supervisory organs - ACPR and AMF. According to the newspaper, the initiative aims to increase the efficiency of the French financial system and, simultaneously, to ensure confidence in the currency.
The head of the French central bank wrote that he wanted France to become the first country in the world to release CBDC. Thanks to it, the country would be able to gain benefits from providing an exemplary digital currency for the central bank and providing an exemplary currency model for other countries.
For now, digital euro only for financial institutions
Les Echos reports that the pilot euro digital program will be targeted only at private sector entities and will not include retail payments made by individuals.
Only after completing the pilot program for financial institutions and adopting the relevant regulations, individual customers will probably be able to use the digital euro. Villeroy said the digital currency for retail customers "calls for particular vigilance".
Race against China and against their digital currency
Many countries in the world are nowadays considering creating their own digital currency. China is the closest to achieving this goal, however. The Middle Kingdom has been working on the digital currency of the central bank for several years now, and the work is, reportedly, at an advanced level. According to the reports, the People's Bank of China is planning to issue digital yuan next year.
The British Virgin Islands (BVI) have plans to create their own digitized money as well. Unlike the digital yuan, though, the BVI token will probably have little impact on the global financial market.
France wants to stop Libra
Villeroy believes that the project is also intended to weaken the possible influence that private digital currencies, such as Libra - a stablecoin developed by Facebook, might have on the market.
Villeroy's position is not surprising. French Finance Minister, Bruno Le Maire, argued before that regulation organs could not allow Libra to enter Europe out of concerns over monetary sovereignty. Moreover, leading EU countries under the leadership of France have long been planning to stop the introduction of Libra in Europe.