Yesterday’s speech was made with this in mind, during the Bundesbank conference entitled “Banks and payments in the digital world”.
Yesterday, September 11, 2020, François Villeroy de Galhau, President of the Bank of France, gave a speech in Berlin to talk about central bank digital currencies (CBDCs) and stablecoins, based 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 digital euro test.
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 regulation.
Yesterday’s speech was made with this in mind, during the Bundesbank conference entitled “Banks and payments in the digital world”, which aims to prepare European payments for the digital currency era.
The key to moving forward in this direction is to establish a partnership between the public and private sectors and work 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 the form of retail. Possible impacts on the banking sector could be reduced with different tools: for example, limiting the amount of digital euros in circulation would avoid excessive transfers of money from commercial banks to digital euros. For the Eurosystem, this strategy would imply clarifying the interaction that we would like to establish between EPI and CBDC, thus validating an intermediate model, while providing proximity to the customer and added value to intermediaries (as front-end solutions) ”.
Among other things, explains de Galhau, this trend in digital payments was accelerated by the pandemic Covid-19, but it was something that was in the air for some time.
“The increased dependence on digital payment solutions also exposes how our European ecosystem has become critically dependent on non-European players (for example, international card schemes and Big Techs), with little control over business continuity, making technical decisions and commercial, as well as data protection, use and storage ”.
Bank of France and stablecoins
The President 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.
In this last point, however, Tether does not have low liquidity, since it has a market value of 13 billion.
As for the service’s neutrality and continuity, there are decentralized stablecoins, as in the case of DAI, which provide all this precisely because they are managed by the community and practically independent of the team.