Speaking at ACPR, the French regulator for banks and insurance, in Paris, French central bank governor François Villeroy de Galha said he wants France to be the first country to issue a digital currency.
According to French news agency AFP, the Bank of France, Banque de France, will start testing its own cryptocurrency in 2020.
“We intend to start experimenting quickly and launch a call for projects (for private sector players) by the end of the first quarter of 2020,” explained François Villeroy de Galhau. The digital euro will initially be used between banks, rather than by everyday citizens.
“I see the interest in rapidly advancing the issuance of at least one central bank digital currency in order to be the leading issuer globally and get the benefits associated with providing an exemplary central bank digital currency.”
Back in September, the governments of France and Germany ostracized Facebook’s Libra project, vowing to block their rollout.
Digital euro pilot program
Villeroy pointed out that there are three advantages to building a digital euro. First, it could guarantee customer access to central bank money, where cash is losing ground. Second, it could be more efficient to tokenize the euro, particularly for settlement and post-market activities. Third, he said it would keep the sovereignity of central banks in light of rivals like Facebook’s Libra.
After initially looking into the possibility of releasing its own digital currency in May this year, the European Central Bank has been investigating the issuance a CBDC to help ensure that the general public remains “able to use central bank money even if the use of physical cash declines,” according to the document released today.
Several European countries are rapidly moving away from cash and towards some form of digital payments. In Sweden, for example, cash is now only used in 19% of payments, and UK government report earlier this year predicted that cash would be used in just 9% of all transactions by the year 2028.
This comes as China continues to develop its digital Renminbi.
The ECB warned that a “CBDC could have far-reaching implications for the financial system,” including the way monetary policy is conducted, and effects on the banking sector in areas such as credit intermediation and bank funding.
Will this lead to the end of cash? What do you think. Let us know in the comment section below.