François Villeroy de Galhau, Governor of the Bank of France, opened the Tokenization Conference with a speech on how blockchain is changing the financial systems around Europe and the world. New players, new settlement assets based on blockchain, and new decentralized market infrastructure are the major elements of the blockchain innovation seen globally, François said.
This, he continued, has and will bring faster and cheaper services around the world, however, it can lead to fragmentation and systemic risk around the world. To harness the goodness of these new tools, François said, there will be a need for regulation and innovation to work together.
He also highlighted the adjustment of the terms of partnership between the Central Banks and the private sectors. Central Banks need to be in the regulation world as well as in the innovation world, the President said.
The recent crash in the global crypto market François explained is a clear sign that regulations need to come into the market, however, he iterated that it is not a reason for complacency amongst Central Banks around the world.
Innovation and regulation are important
François further illustrated how Europe has been on the front line of creating a regulatory framework for crypto-based assets. He cited MiCA (Market in Crypto Assets) as an example of what the EU has done to support the global DeFi space.
He believes that the framework can be adopted by March 2023. Creating contradictory policies or delaying regulations will harm the global crypto market more.
For the Central Bank of France, François said that they are playing their role in terms of regulation as well as innovation. For regulation, this event is a step towards that while in terms of innovation, the Apex Bank in France has been using blockchain.
In 2017, Francois recalled that the bank was the first to use blockchain technology in the management of repositories of creditors. He believes that a CBDC will be good for Europe but is not aware if it will be a legal tender yet.