France’s CBDC Projects to Manage DeFi Liquidity, Settle Tokenized Assets

On Tuesday September 27, Villeroy de Galhau, the Governor at the Banque de France, the Central Bank of France, announced two new projects that aim to achieve the benefits of Central Bank Digital Currencies (CBDCs) used at a wholesale level by banks and financial markets.

The governor made the announcement during his speech at the bank’s digital currency conference on Tuesday. The Head of Central Bank said the first project will look at improving CBDCs’ liquidity management in decentralized finance (DeFi), such as via automated market makers. As a liquidity creator, the CBDC will play a role similar to that of investment banks to sustain trading in particular securities.

On the other hand, the second project will focus on issuing and distributing tokenized bonds on a blockchain. This will build on previous findings about CBDCs being used to settle Web3 securities, such as the French Central Bank’s Project Jura.

In his speech, the governor stated that: “A wholesale CBDC could significantly contribute to improving cross-border and cross-currency payments.” But then he acknowledged that: “CBDCs at the wholesale level attract less attention than their headline-grabbing retail equivalent.”

The governor pledged to add more details about the new projects in the coming weeks. A point to remember is that France’s wholesale CBDC is currently in the second stage of the experimentation programme, which will see four to five new projects introduced.

Intensifying CBDC Efforts

In July this year, France’s Central Bank began the second phase of experimentation with its wholesale CBDC, designed to streamline domestic and cross-border transactions between commercial banks.

France’s Central Bank wants to bring CBDC as a settlement asset as early as 2023. The bank is working to get closer to a viable prototype, testing it in practice with more private financial institutions and foreign central banks in the second half of 2022 and 2023.

Banque de France, which started experiments on a wholesale CBDC in March 2020, completed its first stage of experimentation in December 2021. During the experimentation period, the bank had been exploring the use of the CBDC for the exchange of money between financial institutions.

Besides the wholesale CBDC, the Banque de France is also exploring a retail CBDC as part of the European Central Bank’s broader work on the potential development of a digital euro.

Central banks across the globe are exploring the development of digital currencies not only to address the decline in the use of cash but also to tackle the rising interest in private cryptocurrencies among users.

Central banks are increasingly exploring wholesale CBDCs that are built on blockchain technology and promise to help speed up interbank settlements.

Image source: Shutterstock


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Bancor 3 Integrates Over 100 Tokens to Enhance DeFi Liquidity

Bancor 3, a DeFi liquidity solution by decentralized trading protocol Bancor, has incorporated more than 100 tokens, such as USD Coin (USDC), Polygon (MATIC), and Enjin (ENJ), for more sustainable and safer DeFi yields through community sourcing.

Per the announcement:

“Users can now provide liquidity to over 100 tokens on Bancor 3 with no deposit limits and earn single-sided yield with zero risk of Impermanent Loss.”

With Bancor 3 initially integrating Ethereum (ETH), MakerDAO (DAI), Bancor (BNT), and Chainlink (LINK), the incorporation of the new tokens will help address some of the high-risk strategies that DeFi users are accustomed to because yields will be triggered by actual user activity other than short-term inflationary measures. 


The report noted:

“The launch of Bancor 3 comes amid a period of reckoning for the DeFi industry. Token holders have grown wary of the high-risk and high-frequency strategies that fueled growth in DeFi but have often led to heavy user losses. Users are increasingly turning to safer venues to park their assets.”

Bancor 3 aims to raise decentralized autonomous organizations (DAOs) awareness about token management and smart contract risks. 


The DeFi liquidity solution provider also emphasizes the importance of long-term token holders staying in pools because they can offer liquidity with near-zero maintenance and less risk. The report stated:

“Bancor helps token projects build sustainable on-chain liquidity without the need for costly incentives by giving token holders the ability to deposit in decentralized liquidity pools and earn with single-asset exposure, auto-compounding gains and 100% protection against Impermanent Loss.”

As a DAO treasury management provider, Bancor offers the “Impermanent Loss” guarantee through an automated safe staking system.


In March, Nexus Mutual, an Ethereum-based insurance platform, staked some of its treasury funds in Bancor to gain durable decentralized liquidity. As a result, it joined more than 30 DAOs using Bancor’s treasury management solution, Blockchain.News reported. 

Image source: Shutterstock


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