Bank of France: “We are not afraid of stablecoins”
Bank of France: “We are not afraid of stablecoins”
Stable Coin

Bank of France: “We are not afraid of stablecoins”

By Amelia Tomasicchio - 11 Sep 2020

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Today, September 11th, 2020, François Villeroy de Galhau, Governor of the Bank of France, gave a speech in Berlin to talk about central bank digital currencies (CBDCs) and stablecoins, drawing on the fact that the financial system is changing and needs to adapt to new technologies.

A few months ago, in May, France announced that it had carried out the first test of the digital euro.

In fact, at the beginning of the year, the Bank of France had already launched an experimental pilot approach to digital money to explore its potential and improve the functioning of financial markets, with particular interest in interbank regulations.

Today’s speech took place with this in mind, during the Bundesbank conference entitled “Banking and Payments in the digital world”, aimed at preparing European payments for the digital currency era.

What is essential in order to progress in this direction is to establish a partnership between the public and private sectors and to work closely together.

François Villeroy de Galhau explained:

“My preference would be to seek a renewed public / private partnership for the dissemination of central bank money in a retail form. Possible impacts on the banking sector could be reduced with different tools: for instance, limiting the quantity of digital euro in circulation would prevent excessive shifts of commercial bank money into digital euros. For the Eurosystem, this strategy would imply to clarify the interplay we would like to put in place between EPI and the CBDC, thus validating an intermediated model while providing enough customer proximity and value added to intermediaries (like front-end solutions)”.

Among other things, de Galhau explains, this trend in digital payments was accelerated by the Covid-19 pandemic, but it was something that had been in the air for some time.

“Increased reliance on digital payment solutions also exposes how our European ecosystem has become critically dependent on non-European players (e.g. international card schemes and Big Techs), with little control over business continuity, technical and commercial decision-making, as well as data protection, usage and storage”.

Bank of France and stablecoins

The Governor of the Bank of France also mentions stablecoins in his speech, explaining how they can compete with central banks but should not be feared as they do not offer the same guarantees in terms of risk management, continuity of service, liquidity and neutrality.

On this last point, however, Tether does not have poor liquidity, given that it has a 13 billion market cap.

As for neutrality and continuity of service, there are decentralized stablecoins as in the case of DAI that provide all this precisely because they are managed by the community and practically independent from the team.

Amelia Tomasicchio
Amelia Tomasicchio

As expert in digital marketing, Amelia began working in the fintech sector in 2014 after writing her thesis on Bitcoin technology. Previously author for Cointelegraph and CMO at Eido. She is now the co-founder and editor-in-chief of The Cryptonomist.

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