French central bank speeds up digital currency development
Bank of France governor sparks rush plan to see off Libra through innovation
The Bank of France, the French central bank, is stepping up its development of a digital currency, with the once sceptical Governor hoping to beat any corporate competitors to the punch.
François Villeroy de Galhau provided greater insight into the Eurozone’s efforts to create a digitised currency, stating: "We want to start running experiments rapidly and will launch a call for projects before the end of the first quarter of 2020."
Interest in the creation of a central bank digital currency (CBDC) has skyrocketed following the formation of the Facebook-led Libra Association. The possibility of an alternative means of exchange emerging, which facilitates cross-border payments and is immediately available to Facebook’s more than 2 billion users, has been identified as a threat by most nation states around the world.
Following Libra’s announcement the French and German finance ministers issued a joint statement, asserting that: “no private entity can claim monetary power, which is inherent to the sovereignty of nations.” The French minister, Bruno Le Maire vowed to block the currency’s introduction throughout the European Union and called for research into a digital Euro to be enhanced.
The testing of an interbank digital currency, the CBDC, will serve as a laboratory for a possible future digital Euro.
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Speaking at the ACPR conference in Paris, Villeroy identified three advantages to developing a digital Euro. Firstly by toeknising the Euro one could make settlement and post-market activity more efficient. Secondly, when cash is no longer king, such a currency could guarantee customer access to central bank money. And finally, he emphasised its utility as a defensive measure to guarantee the sovereignty of central banks against private competition.
Villeroy said that a “CBDC would help to preserve the trust in the financial system that stems in part from being able to exchange assets for legal tender." He added: "We as central banks must and want to take up this call for innovation.”
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