On Thursday, the Governor of the Banque de France, François Villeroy de Galhau, delivered a speech to stakeholders from the banking sector, dispelling fears over the impact of a future digital euro. The Governor argued against the retail central bank digital currency (CBDC) being a ‘‘solution in search of a problem”. And he stated the digital euro “will not lead to disintermediation.”
Mr. Villeroy summarized the rationale of CBDCs with a simple question: “As everything becomes digital, why should central bank money be the only thing to remain on paper?” Digitalization is disrupting the fields of finance and payments, so the European Central Bank (ECB) should keep up with the pace of innovation and make strides in the design of digital currencies.
The Governor described the e-euro as a “digital banknote” with the “same characteristics as existing cash” (privacy, safety, accessibility) but additional functionality, including peer-to-peer transfers and conditional payments. We note the mention of privacy versus the anonymity of physical cash.
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