The Governor of the Banque de France puts pressure on Europe. For François Villeroy de Galhau, we must act quickly to prevent the erosion of monetary sovereignty.
Europe’s monetary sovereignty is in danger. This is essentially the message addressed to his counterparts at the ECB and to the European institutions by François Villeroy de Galhau. The Governor of the Banque de France (BdF) is sounding the alarm.
On the occasion of the Paris Europlace conference, the latter called on Europe to make the regulation of cryptocurrencies a priority. According to the governor of the central bank, the monetary sovereignty is at stake, threatened by digital assets.
Villeroy de Galhau moreover sets a relatively short timetable and deadline for action in this sector. “I must insist here on the urgency. We don’t have much time left, one or two years,” he says.
“Both on digital currencies and payments, we in Europe must act as quickly as possible,” he continued. To put it plainly, Europe must mobilize and put in place a regulatory framework for cryptocurrencies in the short term.
Failing to act, considers the Governor of the Bank of France, Europe would expose itself to the risk of “an erosion of our monetary sovereignty” and therefore also of potential weakening of the Euro.
The threat comes in particular from digital currencies, first and foremost stablecoins, issued by private actors. These companies could eventually develop “financial infrastructures and private monetary systems”, competing with sovereign currencies.
The Digital Euro or CBDC is one possible response to this competition. However, its timetable does not foresee the issuance of an e-euro for at best four or five years. This was acknowledged in 2021 by the President of the ECB, Christine Lagarde.
But Europe has also been working since 2020 to establish a regulatory framework for crypto-assets and stablecoins. Last September, the Commission proposed its digital finance package.
The European executive thus defined rules to issuers of stablecoins. The Commission wants “a tailored regime” with “strict requirements” for issuers. Likewise, crypto asset service providers will have to meet conditions to obtain an authorization for the single market.
“Safeguards include capital requirements, custody of assets, a mandatory complaints procedure available to investors and investor rights against the issuer,” the framework states.