Bank of France Chairman Francois Villeroy de Galo has warned that Europe cannot delay addressing the challenges posed by global private sector digital assets.
The warning by Francois Villeroy de Galhau came as the governments of five EU countries – Germany, France, Italy, Spain and the Netherlands-supported
the European Commission’s intention is to develop rules for asset-backed cryptocurrencies, especially stablecoins.
In a joint statement, the five governments vowed to prevent global stablecoins from operating in the EU until all legal, regulatory and regulatory issues are resolved. The European Commission is expected to present
their proposals for regulating crypto assets at the end of this month.
In his speech at the conference of the German Federal Bank, the Chairman of the Bank of France said:
“We in Europe face the need for urgent and strategic decisions regarding payments that will have implications for our financial sovereignty for decades to come.”
According to Villeroy de Galo, the most serious risk is that “large technology companies”, profiting from their penetration into the global market, will create “private financial infrastructures and monetary systems” that compete with state monetary sovereignty, since they will position themselves as issuers and managers of a universal “currency”.
The Chairman of the Central Bank of France warned that as a result, the European state-owned cryptocurrency may “trail in the tail” of the future stablecoin from a large technology company. Moreover, he said that individual jurisdictions can respond to the pressure of private crypto assets for payments by issuing their own public cryptocurrencies both domestically and globally, but without sufficient coordination in the global financial community.
Together, these multiple state-owned cryptocurrencies and private-sector initiatives may limit the participation of other Central banks. He stressed that the European Central Bank (ECB) and the Eurosystem as a whole “cannot afford” to “lag behind in the development of a state-owned cryptocurrency.” The state cryptocurrency of the European Union can consist of both retail (for the General public) and wholesale (for financial organizations) versions.
According to Villeroy de Galo, the existing problems in the efficiency of payments, especially cross-border ones, will have to be solved “fundamentally” with the help of public-private initiatives. If ignored, global private sector stablecoins will first address these shortcomings and thus set the agenda for the future development of the digital economy.
The Chairman of the Central Bank of France also noted the existing asymmetry in the payment system:
“Our European system has become critically dependent on non-European players to control business continuity, make technical and commercial decisions, and protect, use, and store data.”
Recall that this week, the head of the European Central Bank, Christine Lagarde, said that a final decision will soon be made on the possibility of launching a digital currency for the Eurozone countries.