The Banque de France, accompanied by several international financial institutions, has carried out experiments to make central bank digital currencies (MNBC) interact with decentralized finance (DeFi) protocols. According to the French institution, automated market makers (AMM) used in DeFi have interesting characteristics. Overview of what to remember from these experiences.
A first reconciliation between Web3 and traditional finance?
Because of their disruptive characteristics, blockchains and their underlying innovations have previously been the subject of much criticism by certain players in traditional finance. However, a step forward has just been taken by a group of European and Singaporean institutions.
In a project led by the Bank for International Settlementsthe central banks of France, Switzerland and Singapore have collaborated through experiments linking central bank digital currencies (MNBC) and decentralized finance (DeFi).
The main objective of the operation was to carry out international transactions with an MNBC dedicated specifically to wholesale trade. For that, the process had to respect 3 key elements :
- a common token standard on a public blockchain;
- bridges to transfer MNBCs from one network to another;
- and an automated market maker (AMM);
Furthermore, according to Emmanuelle Assouan, general director of financial stability and operations at the Banque de France, the AMMs of decentralized finance prove interesting in the context of a market allowing the exchange of digital currencies :
“Project Mariana also provides an in-depth analysis of the possibilities that automated market makers can open up for a DLT-based foreign exchange market. There remain many avenues to explore to improve cross-border payments: Mariana constitutes the cornerstone of the ambition of public authorities in this area. »
👉 Central Bank Digital Currencies (CBNC) – What are they and how do they work?
Coinhouse: the most famous French crypto platform
MNBC – Their development is debated in Europe
Although central bank digital currencies are not unanimous, European financial institutions continue to move forward on the issue of the digital euro.
Last June, major statements were made by the Bank of France. François Villeroy de Galhau, the current governor of the central bank, announced “Cash+”new name for the digital euro, whose public deployment is planned current 2027.
On the issue of personal data and potential censorship of the institution, doubts persist. More than a means of competing with stablecoins, this digital euro is regularly highlighted by its defenders for its potential benefits against money laundering.
Is this a convincing enough argument to once again reduce the quantity of cash in circulation in French society? A few days ago, Christine Lagarde, President of the European Central Bank (ECB), maintained a delicate position regarding data protection arising from Cash+:
“ We are working to protect privacy, but since digital money leaves a trace on the blockchain, it will not be completely anonymous like it is with a bank note. »
Remember that in May 2022, the director of the ECB declared that a cryptocurrency “is worth nothing. It’s not based on anything.” However, these new assets allow to limit the use of personal data And plays a role of digital currency in certain emerging countries, such as Nigeria, a country ranked 2nd in the world in the adoption of cryptocurrencies.
👉 How to buy Bitcoin (BTC) in a few clicks?
Cryptoast Research: stay ahead of the market
Source : Monetary Authority of Singapore
Receive a summary of crypto news every Monday by email 👌
What you need to know about affiliate links. This page may feature investment-related assets, products or services. Some links in this article may be affiliated. This means that if you buy a product or register on a site from this article, our partner pays us a commission. This allows us to continue to offer you original and useful content. There is no harm to you and you can even get a bonus using our links.
Investments in cryptocurrencies are risky. Cryptoast is not responsible for the quality of the products or services presented on this page and cannot be held responsible, directly or indirectly, for any damage or loss caused following the use of a good or service highlighted in this article. Investments related to cryptoassets are risky by nature, readers should do their own research before taking any action and only invest within the limits of their financial capabilities. This article does not constitute investment advice.
AMF recommendations. There is no guaranteed high return, a product with high return potential involves high risk. This risk-taking must be in line with your project, your investment horizon and your capacity to lose part of this savings. Do not invest if you are not prepared to lose all or part of your capital.
To go further, read our Financial Situation, Media Transparency and Legal Notices pages.