Last Saturday, Francois Villeroy de Galhau, Governor of the Bank of France, clarified his stance on cryptoassets—joining the growing number of policymakers who believe that cryptocurrencies should only be issued by central banks.
Although Villeroy acknowledges the potential utility of cryptocurrency in cash transactions, he does not believe that private entities should be at the helm.
“Currency cannot be private, money is a public good of sovereignty," said Villeroy.
Villeroy further clarified his opinion in an interview with French news outlet France Inter, noting that cash usage has declined in many European nations and that digital alternatives could be a desirable alternative, particularly in northern Europe.
“In some northern European countries, notably Sweden and the Netherlands, the use of banknotes is falling extremely quickly,” Villeroy told France Inter. “They are wondering whether we need to give citizens the right to digital money that is no longer a physical bank note but which has the same quality, notably the security of a central bank.”
Bank digital currencies vs Libra
Interest in a bank-backed cryptocurrency gained significant steam last year when Facebook announced plans to launch its own stablecoin known as Libra. Although there have been several stablecoins launched in the past, many of which are now in popular usage, none had such prominent backers; as well as Facebook itself, the Libra Association included Coinbase, Lyft, Uber and more upon its launch.
Soon after Libra’s launch, however, lawmakers, regulators and government figureheads from around the world began pouring cold water on the project. German finance minister Olaf Scholz recently stating that "we cannot accept a parallel currency." His French counterpart Bruno Le Maire went a step further, flat out pledging to block the new cryptocurrency in Europe.
Prominent members of the Libra Association have abandoned the project over the seven months, including the likes of Visa, eBay, Stripe and most recently, Vodafone.
Nonetheless, de Galhau claims that his statements are not a direct response to Libra, but instead a reaction to fast-evolving technology. Whatever the case, it may not be long until the first central-bank issued digital currencies make their appearance in Europe.