French central bank top executive argues for a European cryptocurrency

Could the EU soon have its own centralized cryptocurrency? That is something that a French central bank executive has made an argument for.

Denis Beau, first deputy governor of Banque de France, suggested that the European Central Bank (ECB) should look into developing its own central bank digital currency.

Beau made the argument in a speech on November 21. In his speech, Beau stated that the financial landscape has changed tremendously over the past decades. One of those is the need for cross-border money transfers, which he noted is still a costly and unsafe endeavour, “in particular for emerging countries.”

Moreover, the traditional banking infrastructure means low traceability and efficiency, leaving the door open for money laundering and terrorism funding concerns, he argued.

Beau continued that blockchain technology could alleviate some of these concerns. “The implementation of those innovations could have an important impact on the financial industry in particular to facilitate gross and simultaneous delivery-versus-payment processes, cross-currency settlement, resilience and recovery from operational incidents,” Beau stated.

However, he issued a warning that the proliferation of solutions in the market could result in “disorderly approaches and heterogeneous adaptions of market infrastructures, in particular when it comes to the modalities of settlement.”

Beau made the argument that the ECB should be open to experimenting with a central digital currency, urging it to follow in the footsteps of Banque de France, which has “started gaining exposure and experience with those innovations”.

“One possibility often mentioned would be for us to issue a central bank digital currency to support wholesale clearing and settlement services on a decentralised basis using DLT,” he said. “We, at the Banque de France, are therefore quite open for experiments in that direction, together with the ECB and other central banks of the Eurosystem, in particular with regard to a wholesale central bank digital currency.”

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