Banco de France Governor François Villerois de Gallo has warned that Europe cannot delay tackling the challenges posed by the global digital assets of the private sector.
François Villeroy de Galhau’s warning comes as the governments of the five EU countries – Germany, France, Italy, Spain and the Netherlands – have supported the European Commission’s intention to develop rules for asset-backed cryptocurrencies, especially stablecoins.
In a joint statement, the governments of the five countries have pledged to prevent global stablecoins from operating in the EU before all legal, regulatory and regulatory issues are resolved. The European Commission is expected to present its proposals for regulating cryptoassets later this month.
In his speech at a conference of the German Federal Bank, the Governor of the Bank of France stated:
“We in Europe are faced with the need for urgent and strategic payments decisions that will have implications for our financial sovereignty for decades to come.”
According to Villerois de Gallo, the most serious risk is that “big tech companies”, capitalizing on their penetration into the global market, will create “private financial infrastructures and monetary systems” that compete with state monetary sovereignty, as they will position themselves as issuers and managers of the universal “currency”.
The chairman of the Central Bank of France warned that as a result, the European state cryptocurrency may “lag behind” the future stablecoin from a large technology company. Moreover, he said that individual jurisdictions could respond to pressure from private cryptoassets for payments by issuing their own government-owned cryptocurrencies both domestically and globally, but without sufficient coordination in the global financial community.
Together, these multiple government cryptocurrencies and private sector initiatives could 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 the state cryptocurrency.” The state cryptocurrency of the European Union can consist of both retail (for the general public) and wholesale (for financial institutions) versions.
According to Villerois de Gallo, existing problems in the efficiency of payments, especially cross-border ones, will have to be addressed “at the root” with the help of public-private initiatives. If ignored, the private sector global stablecoins will address these shortcomings in the first place 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 players outside of Europe 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 the final decision on the possibility of launching a digital currency for the Eurozone countries will soon be made.