The Bank of France governor believes that Europe needs to regulate the cryptocurrency space fast, or they could challenge the region’s monetary sovereignty.
The Bank of France governor Francois Villeroy de Galhau has pointed out that Europe needs to regulate the cryptocurrency market fast. Failure to do so could lead to digital assets challenging its monetary sovereignty, he added.
The governor said this at a Paris Europlace financial conference earlier today. He cautioned that the EU has only one or two years to establish a regulatory framework for cryptocurrencies. If the EU fails to act, it could lead to the erosion of the region’s monetary sovereignty and potentially weaken the euro.
He said, “I must stress here the urgency: we do not have much time left, one or two years. On both [digital] currencies and payments, we in Europe need to move as quickly as possible.” The governor has urged the EU to establish and adopt a regulatory framework within the coming months since cryptocurrencies are becoming more important in regional markets.
Villeroy pointed out the fact that the use of cash dropped during the first few months of the pandemic. If the trend continues, Villeroy said it could lead to the marginalisation of the use of fiat currencies.
The Bank of France governor has been vocal about the risks posed by cryptocurrencies. On numerous occasions, he has discussed the risks posed by cryptocurrencies and stablecoins to the financial system, urging regulators to do something about it.
In September 2020, Villeroy warned that big tech companies would develop private financial infrastructures and monetary systems and issue their own stablecoins, which could affect financial sovereignty in the EU for decades.
Several countries are actively researching and developing central bank digital currencies (CBDCs). The CBDCs would allow the central banks to move into the digital currency market and maintain monetary sovereignty.