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Bank of France talks about the digital payments for Europe, says Banks should not fear Stablecoins

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The Governor of the Bank of France (Banque de France), Villeroy de Galhau talked about the recent and gradual changes in the financial payment system, gave a speech in a conference held in Berlin on 11th of this month. The speech centred on CBDCs (Central Bank-backed Digital Currencies) and the necessity of aligning with these technologies. The conference was targeted at making preparations for Europe’s digital payments era with the title; “Banking and Payments in the digital world”

Earlier this year in May, the country took the first test on the digital Euro. Experiments on the potential digital currency started in the Bank of France as well to improve financial markets functions with the interest of interbank relations. Close relation between the public and private sectors is important to ensure progress in digital payment system direction.

Villeroy de Galhu gave explanations;

“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 between EPI and the CBDC, thus validating an intermediated model while providing enough customer proximity and value added to intermediaries (like front-end solutions)” 

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The Governor commented on the recent increase in digital payment system owed to the pandemic and the dependence of the European ecosystem on other strategic players;

“increased reliance on digital payment solutions also exposes how European ecosystem has become critically dependent on non-European players (e.g international card schemes and Big techs), with little or no control over business continuity, technical and commercial decision-making, as data protection, usage and storage.”

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The governor also mentioned stablecoins and noted that they should not be feared as they do not have the same liquidity, risk management and neutrality compared to Central banks, hence they can be an healthy competition with central banks.