The governor of the Bank of France warned against this Europe cannot afford to lose momentum in addressing the challenges posed by the global digital assets of the private sector.
His warning came when five EU governments (Germany, France, Italy, Spain and the Netherlands) supported the European Commission’s intention to draft a regulation for asset-backed crypto-assets, especially stablecoins.
In your draft joint statement According to reports, the five governments have pledged to prevent global stablecoins from functioning in the EU before all legal, regulatory and prudential issues are resolved. The commission is expected to come up with its proposals to regulate crypto assets later this month.
In his speech at the Bundesbank conference on September 11th, the Governor of the Banque de France, François Villeroy de Galhau said:
“In Europe, we are faced with urgent and strategic decisions about payments that will affect our financial sovereignty in the coming decades.”
According to Villeroy de Galhau, the most immediate risk is that the “Big Techs” will benefit from their market penetration, build “private financial infrastructures and” monetary systems “and compete with public currency sovereignty, since they will position themselves as issuers and administrators of a universal ‘ Currency’. “
In this situation, The governor warned that a potential central bank (CBDC) digital currency “could be issued in the” back end “of a future” big tech “stablecoin.
In addition, he warned that individual jurisdictions could respond to the overwhelming pressure of private payment goods by issuing their own CBDCs both domestically and globally, but without sufficient coordination in the global financial community.
Formulating these multiple CBDCs with private sector initiatives would run the risk of neglecting contributions from other central banks, he said.
Without sparing his words Villeroy de Galhau stressed that the European Central Bank (ECB) and the Eurosystem as a whole cannot afford to be left behind in a CBDC.
A European CBDC could consist of a retail version (for the general public) and a wholesale version (for financial institutions), he said. The Governor also stressed that there is no contradiction between considering a Euro-CBDC and supporting the European Payment Initiative.
According to Villeroy de Galhau, there are existing inefficiencies in payments, especially cross-border payments, They should be tackled “at the root” through public-private initiatives. If this is ignored, the global stablecoins of the private sector will fix these shortcomings first, thus setting the agenda for the future development of the digitized economy.
Villeroy de Galhau also pointed out the existing asymmetries in the payment traffic landscape and stated:
“Our European ecosystem has become critically dependent on non-European actors (e.g. international card systems and major technologies), with little control over business continuity, technical and commercial decision-making, and protection and use and data storage.”
The asymmetry doesn’t stop there. “Europe did not build global social networks like some big countries,” he said, making a coherent and decisive strategy for digital innovations in payments even more urgent.
In response to a future stable private sector currency, the governor declared that “the adaptation of existing regimes must fit into a broader legal framework that will be adopted globally”.