HomeNewsWholesale CBDC Launches in Weeks in EU: Privacy Coins Monero, Dash, and...

Wholesale CBDC Launches in Weeks in EU: Privacy Coins Monero, Dash, and ZCash Gain Momentum

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  • European central banks are set to reveal plans for a wholesale CBDC that caters to financial markets.
  • Controversial plans for a CBDC for regular citizens encounter resistance due to privacy concerns and commercial bank implications.

Wholesale CBDC: A Leap Toward Modern Financial Transactions

François Villeroy de Galhau, the head honcho of France’s central bank, dropped a significant announcement recently. He indicated that central banks from the Euro area are on the brink of unveiling their blueprint for a wholesale central bank digital currency (CBDC). Such a step is seen as an avant-garde move to revolutionize the way financial institutions manage securities and foreign exchange settlements.

While the financial world watches this space closely, another significant digital initiative, the digital euro for the general populace, seems to be lagging in its progress. Why? The plan has ignited several debates among lawmakers. Concerns primarily revolve around privacy implications and potential disruptions to the commercial banking landscape.

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Villeroy de Galhau, while addressing an event in Paris, elucidated,

“The Eurosystem is in the midst of exploring cutting-edge technologies centered on central bank money settlements. This includes ushering in a pioneering tokenized CBDC.”

He further highlighted the imminent release of the eligibility criteria and expressions of interest.

“Trials encompassing genuine transactions will gain momentum throughout the subsequent year,”

he stated.

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The Strategic Framework of the CBDC

For the uninitiated, the CBDC’s core will likely function on a permissioned network. Such a framework, backed by smart contracts, ensures that central banks can maintain their stronghold over money supply dynamics, a cornerstone of their mandate, especially when it comes to controlling inflation and ensuring financial stability.

The journey to CBDC will not be restricted to tried-and-tested methodologies. As Villeroy de Galhau points out, the exploration will stretch across

“various protocols and blockchain avenues”.

Additionally, the bank’s own Distributed Ledger for Securities Settlement System, abbreviated as DL3S, will also be in the spotlight.

Given the enormous potential, it’s unsurprising that a recent study by finance lobbyists predicted that financial arenas powered by distributed ledger tech could lead to annual savings north of $100 billion, achieved by collateral liberation and back-office process automation.

However, not all CBDC ventures have enjoyed a smooth sail. Plans for a retail-based CBDC faced stiff winds of resistance, evident from a recent letter acquired by CoinDesk. This letter, penned by an assortment of EU lawmakers, beseeches the European Central Bank to hit the brakes on retail CBDC decisions. Their plea is simple: allow adequate time to reach a consensus on the legal perimeters surrounding this digital currency. Notable signatories encompass influential figures like the Netherlands’ Michiel Hoogeveen and former Belgian Finance Minister Johan van Overtveldt.

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