In today’s speech, the Governor of the Bank of France recognized the importance of digital currencies and the need for Europe to take a strategic decision on payments.
François Villeroy de Galhau, the Governor of the Bank of France, thinks that stablecoins can compete with the money of both commercial and central banks, and draws the attention of the whole of Europe to this. The Governor adds that stablecoins do not provide the same guarantees as regards credit risk, liquidity or neutrality, but should be taken into account.
The Governor and his main argument:
we in Europe face urgent and strategic choices on payments that will have implications for our financial sovereignty for decades to come.
François emphasizes the so-called “strategic square”, which consists of:
- Cross border payments shortcomings,
- BigTech’s global projects in the financial sector (including stablecoins),
- The developing European Payment Initiative,
- The potential Central Bank Digital Currency (CBDC)
According to the governor, these four points should be resolved so that the European strategy can be implemented.
As for the risks themselves, François is clear, first and foremost, BigTechs, which can take advantage of the global reach and build private financial infrastructures. This can subsequently compete with the public monetary sovereignty, which could cause problems.
According to him, the second risk is CBDCs, which, if not sufficiently coordinated, can set a precedent when it comes to links with private projects.
However, in the next part of the speech, the governor acknowledges the importance of the CBDC and says:
Let me be clear: we cannot allow ourselves to lag behind on CBDC. That may mean that we create if necessary a retail CBDC, in order to ensure the accessibility of central bank money for the general public, in particular in countries where the use of cash in payments is declining.
Among other bankers who think that stablecoins can become widely used currency is also Andrew Bailey, Governor of the Bank of England, who published his speech last week.
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