French Central Bank Official Wants to Improve Financial System With Blockchain

The first deputy governor of the French central bank has called for distributed ledger technology-based settlements and payment systems in Europe.

Speaking at the AFME Annual Capital Markets Technology and Innovation Conference on Nov. 21, Denis Beau, the first deputy governor of Banque de France, delved into the issue of policy frameworks that could potentially help to bring innovation and growth into Europe's capital markets.

"The tokenisation of financial assets combined with the recourse to blockchain-based solutions and more broadly Distributed Ledger Technologies to store and transfer those assets could help answering market's demands."

Beau further specified that DLT could facilitate gross and delivery-versus-payment processes, cross-currency settlement, resilience, and recovery from operational incidents.

The official proposed that the Eurosystem open itself to experimenting with the technologies in a bid to improve the conditions under which the central bank makes money available as a settlement asset.

"We, at the Banque de France, are therefore quite open for experiments in that direction, together with the ECB and other central banks of the Eurosystem, in particular with regard to a wholesale Central Bank Digital Currency."

The deputy governor noted that the adoption of new technologies in the greater European financial system does not come without challenges, as they can run the risk of "Disorderly approaches and heterogeneous adaptations of market infrastructures, in particular when it comes to the modalities of settlement."

"With the emergence of so called crypto-assets and so called stablecoins, we may also see new settlement assets develop which may compete against and possibly, according to their promoters, replace commercial and central bank money as settlement assets at the center of our payment systems."