Cryptocurrency is a virtual or the digital currency that is secured by cryptography. It uses cryptography enabled methods to secure and verify the transactions and it is a digital asset designed to work as a medium of exchange. Bitcoin is a decentralized digital currency that utilizes cryptocurrency and peer to peer (p2p) technology to create and manage monetary transactions as opposed to a central authority.
The Central Bank of France Is on the motive of conducting a series of experiments whose analysis could be used to change the way how money works and researching about how the digital currencies work. The cryptocurrencies or the bitcoin does not form a part of the experiments, as announced by the central bank of France. The central bank of France works together with European central bank to determine the monetary policy. The eight participants involved in this experiment are consulting giant Accenture, settlement giant euro nuclear, HSBC Bank, French Firm, Iznes, etheruem platform Liquid Share, ProsperUS, crypto bank seba and forge.
The main objectives of the experiments include testing regulation using digital currency to improve cross border payments and finding out new methods of exchanging financial instruments for central bank money excluding the cryptocurrencies. The World’s leading Central Bank shows how trusted institutions are eagerly finding out ways to learn the best that cryptocurrencies and blockchain technologies have to offer for them, but only within limits.
Blockchain technology is a distributed ledger technology (DLT) that lets bitcoin to exist. Bitcoin is a decentralized digital currency where users can transfer the bitcoin without the interference of a third-party authority like a bank or the government.
The great players in finance and technology are very much interested in exploring the potential contributions of the digital currency to improve or enhance the functioning of their markets. The Central Bank of France will begin digital currency experiments with each candidate which can last to several months. Applications were invited for the bank’s experiments before 15th may. The experiments help to define the monetary policy of the Europe and to implement it in France.
Apart from Central bank of France, Central Bank of China started its CDBC experiments years ago and currently testing an operational implementation. If successful there could be borderless transactions, giving people the choice of storing the Chinese renminbi instead of dollars as the worlds reserve currency.
When the CDBC experiments are successful, some other changes in how money works might include giving citizens accounts with central banks allowing them to bypass commercial banks, and receive direct access to stimulus checks and more.
Another controversial side effect of CDBC effect is it could allow online payments while maintaining the privacy that citizens always enjoyed with cash.
