French central banker says issuing digital euro is a duty.

The Governor of the Banque de France, François Villeroy de Galhau, spoke at the Global Official Institutions Conference hosted by BNP Paribas on June 22nd and stated that the digital euro will benefit all stakeholders. He also mentioned that disintermediation is not in the works. Before discussing the central bank digital currency (CBDC), Villeroy de Galhau explained why the banking crisis earlier this year did not affect the eurozone. He credited European regulation and supervision for keeping its banking system safe. However, the acquisition of Credit Suisse by UBS “raised new questions” about reliable crisis resolution. “The framework for the ECB to provide ‘Eurosystem resolution liquidity’ has yet to be built,” he said.

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Villeroy de Galhau shifted to the topic of the “less consensual ground” of the digital euro. He asked, “As everything is becoming digital, why should central bank money be the only thing to remain in paper?”

️ François Villeroy de Galhau :  “Notre engagement est de ramener l’ #inflation à 2% d’ici fin 2025, qui est la bonne température de l’ #économie , comme 37° est la bonne température du corps”.

— Banque de France (@banquedefrance) June 15, 2023

He continued by saying that the digital euro, also known as “Cash+”, will be a digital banknote. Its use will be optional, but it will have the advantage of allowing the use of central bank money in e-commerce. Without it, a crisis of trust would arise “sooner or later.” However, according to Villeroy de Galhau, the digital euro will not lead to disintermediation. He stated that “We central banks have absolutely no intention to open private accounts.”

Wholesale CBDC is also a joint undertaking, Villeroy de Galhau said. Commercial and central banks share the goals of “fostering tokenised finance and tokenised securities; facilitating cross-border interoperability.” The digital euro will not be a competitor to commercial bank money, but it will help resist “giving ground to so called ‘stablecoins’ probably issued by non-European players.” In fact:

“It’s very probably our duty to issue a CBDC, but it’s our will to issue it with you, commercial banks, and not against you.”

The digital euro will be gradually rolled out beginning in 2027 or 2028, if approved by the European Central Bank Governing Council, Villeroy de Galhau said.

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