In Europe and the United States, the race for digital currencies is on

The euro sign in Frankfort (Germany), headquarters of the ECB, in May 2020.

In Washington, Frankfurt and on the Silicon Valley side, in the cozy corridors of central banks and in the offices of digital giants, we look at the Chinese experimentation around the digital yuan with a mixture of curiosity and concern.

Curiosity, because this full-scale test offers an overview of the possibilities opened up by “central bank digital currencies” (MDBC), as the experts call them. Worry, “Because getting ahead of this technology could allow China to dictate future evolutions of global payment infrastructures, those facilitating cross-border trade and remittances”, summarizes Aditi Kumar, specialist in the subject at Harvard University.

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Today, nearly 80% of the world‘s central banks are studying the possibility of creating their own digital currency, based in particular on blockchain (a technology for storing and transmitting information), according to the Bank for International Settlements (BIS). . A handful of them have already started experiments.

An experiment by the Banque de France

“There are two types of MDBC, very different, specifies Patrick Artus, chief economist of Natixis. The first is reserved only for settlements between banks, while the second is intended for individuals – it is, then, the digital equivalent of banknotes issued directly by the central bank. “ This second form of currency would not pass through bank deposits, like euros or dollars today used for payments by credit card or transfers.

For several months, the Banque de France has been experimenting with the first type of MDBC. In October 2020, the European Central Bank (ECB) launched a public consultation on the advisability of creating a digital version of the single currency intended for citizens, in addition to cash. “We will have a digital euro”, predicted its president, Christine Lagarde, Wednesday, January 13, adding that it would nevertheless take time.

Read also “Digital central currency”: the Banque de France will launch an experiment in 2020

The Bank of Sweden has been working on an “e-krona” since 2016. Tested for a year, it could complement traditional crowns and be used for payments by a mobile application. For its part, the US Federal Reserve (Fed, central bank) is conducting research with the Massachusetts Institute of Technology.

A double stake

In all cases, the challenge is twofold: to use these new technologies to improve the security and efficiency of means of payment and, above all, not to be overwhelmed by innovations from China or the private sector. Like bitcoin, created in 2008, whose price continues to soar.

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