conference “ unveiling the potential of wholesale cbdc : what insights and prospects? ” - paris, 03 october 2023 “ wholesale cbdc : as decisive as retail cbdc, and actively experimenting ” speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ), deborah guedj ( deborah. guedj @ banquefrance. fr ) page 1 sur 6 ladies and gentlemen, it is a great pleasure to welcome you to this conference organised by the banque de france. i would also like to welcome today ’ s distinguished speakers from both the central banking community and the private sector. i am convinced that only broad - ranging and comprehensive cooperation between all of us will make it possible to “ unveil the potential of wholesale central bank digital currency ( cbdc ) ”, which is the theme of today ’ s conference. we are currently facing a wave of technological disruption in the form of the blockchain and tokenisation : our ambition as central bank and supervisor is to explore the embedded – and hugely promising – potential of these technologies as early as possible. this is why no less than 93 % of central banks are currently exploring the possibilities for cbdc. i wholesale cbdc attracts less attention and passion than its retail equivalent ; but it is not less important. its purpose ( the “ why ” question ) is probably even better perceived by market players than that of retail cbdc and i ’ ll hence start with its two very interesting applications, namely the tokenisation of assets and cross - border payments ( i ). secondly, i will discuss the “ how ” question, the technicalities of how this might work. the banque de france is actively conducting experiments at all levels to develop such a system ( ii ). i. wholesale cbdc ’ s twin purposes and potential a. maintaining central bank money as a “ safety pivot ” in a tokenised world the tokenisation of finance is a nascent trend, which is subject to a growing interest from the financial industry and its participants. indeed, digital ledger technologies ( dlt ) could enhance the straight - through processing of trade and post - trade activities and hereby generate enormous savings both for the financial industry and end - users. to make this happen, new private settlement assets such as stablecoins are emerging in this tokenised ecosystem. paypal ’ s project of a global stablecoin

that is precisely why fiscal policymakers also need to bind themselves and why having credible fiscal rules and monitoring them consistently is so decisive in a monetary union. 4 monetary policy strategy review ladies and gentlemen, with sound public finances, independence and a clear mandate, monetary policy requires foundations that it cannot lay itself. the eurosystem, however, can shape its monetary policy strategy so that we can fulfil our mandate the best we can, namely by safeguarding price stability as our primary objective. to this end, the eurosystem is currently conducting a fundamental review of its strategy. one of the key questions here is how we should formulate our specific policy objective. thus far, the ecb governing council has aimed to keep inflation rates in the euro area below, but close to, 2 % over the medium term. an explicitly symmetric formulation of our policy objective as an inflation rate of 2 % over the medium term would, i believe, be clearer and easier to understand. it could help to keep inflation expectations firmly anchored. including the wording “ over the medium term ” is important, as it makes clear that monetary policy can neither immediately influence inflation nor steer it with pinpoint accuracy. this realistic formulation gives the ecb governing council the freedom to not have to react overhastily to every change in the data, and it thus affords monetary policymakers the flexibility that is needed. 17. shin, h. s. ( seite ), central banks and the new world of payments, speech delivered on 30 june 2020. 18. king, m., monetary policy : theory in practice, speech delivered on 7 january 2000. the current strategy is forward - looking only. whether the inflation rate in the past has diverged from the target is of no direct consequence. this would be different under history - dependent strategies, which are being discussed as a possible alternative. for example, the us federal reserve has changed its strategy to a flexible form of average inflation targeting. the thrust of this approach is to achieve the desired inflation rate on average over a number of years. if, for example, inflation has previously undershot the target, the central bank will aim for a rate above the target value for a while to compensate for this. provided the central bank credibly commits in this regard, households and enterprises will also expect higher inflation. interest rates will thus fall in real terms without having to be lowered in nominal terms, giving the economy a boost. this way, average inflation targeting provides