On June 22, the Governor of the Banque de France, François Villeroy de Galhau, told commercial bankers that the digital euro has something to offer for all comers. Disintermediation is not underway, said in the World Conference of Official Institutions organized by the French multinational bank BNP Paribas.
Before referring to central bank digital currency (CBDC) for Europe, Villeroy de Galhau began by explaining why the banking crisis earlier in the year did not affect the eurozone. He credited European regulation and supervision with keeping his banking system safe. He noted, however, that UBS’s acquisition of Credit Suisse “raised new questions” about the credible resolution of the crisis. “The framework for the ECB to provide ‘Eurosystem resolution liquidity’ is yet to be built,” he said.
Villeroy de Galhau’s tone became more cajoling as he shifted to the “less consensual terrain” of the digital euro. He asked rhetorically: “As everything is going digital, why should central bank money be the only thing that remains on paper?”
️ François Villeroy de Galhau : “Notre engagement est de ramener l’#inflation at 2% by the end of 2025, what is the good temperature of the#economieat 37° est la bonne température du corps”. pic.twitter.com/SEdiuedj8u
— Bank of France (@banquedefrance) June 15, 2023
“The digital euro will be a digital ticket, or ‘Cash+’,” he continued. Its use will be optional, but it will have the advantage of allowing the use of central bank money in electronic commerce. Without it, a crisis of confidence would emerge “sooner or later.” But the digital euro will not lead to disintermediation, according to Villeroy de Galhau, because:
“Central banks have no intention of opening private accounts.”
The wholesale CBDC is also a joint venture, Villeroy de Galhau said. The commercial and central banks share the goals of “fostering tokenized finance and tokenized securities; facilitating cross-border interoperability.” The digital euro will not only not be a competitor to commercial bank money, but will help resist “giving ground to so-called ‘stablecoins’ likely to be issued by non-European players.” In fact:
“It is very likely that our duty is to issue a CBDC, but our will is to issue it with you, the commercial banks, and not against you.”
The digital euro would be introduced gradually from 2027 or 2028, if approved by the Governing Council of the European Central Bank, Villeroy de Galhau said.
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