Bank of France Governor advocates for Euro CBDC.

The fintech industry is evolving and central banks, including Banque de France, are exploring the concept of Central Bank Digital Currencies (CBDCs) as potential replacements for traditional fiat currencies.

One of the prominent figures at the forefront of these discussions is François Villeroy de Galhau, the Governor of the Banque de France, who is taking a diplomatic approach in promoting the proposed Euro CBDC to commercial bankers. At the Global Official Institutions Conference, Villeroy de Galhau emphasized that the CBDC would not be a competitor to fiat currencies and would be a ‘solution in search of a problem.’

Villeroy de Galhau challenged the traditional mindset surrounding central bank money and highlighted the need for innovation by asking, “As everything is becoming digital, why should central bank money be the only thing that remains on paper?”

The proposed e-euro, also known as ‘Cash+’, is envisioned as a digital banknote that combines the benefits of traditional cash with the capabilities of digital currency. According to Villeroy de Galhau, the digital euro will be phased in starting in 2027 or 2028 if authorized by the European Central Bank Governing Council.

France CBDC Functionalities

One of the key features of the e-euro is its commitment to privacy, which addresses concerns and offers a level of anonymity similar to physical cash transactions. Additionally, the basic functionalities of the e-euro will be free of charge for individuals, making it accessible to all and ensuring financial inclusion remains a priority. The e-euro can also be used in e-commerce transactions.

Villeroy de Galhau noted that it is the responsibility of central banks to enable citizens to access and use the digital euro, but the decision to use it will be a matter of individual freedom. The digital euro is not intended to replace traditional currencies, but rather to complement existing payment options.

Villeroy de Galhau Addresses Recent Banking Crisis

Villeroy de Galhau also addressed the banking crisis earlier in the year and its consequences for the eurozone. He acknowledged that the eurozone banking system remained stable during the crisis, but certain events raised questions regarding reliable crisis resolution. He mentioned that the framework for the European Central Bank (ECB) to provide “Eurosystem resolution liquidity” was yet to be established.