Before Facebook, before Sweden or even before China, will France first launch a cryptocurrency? François Villeroy de Galhau, Governor of the Banque de France, announced on December 5, his intention to test a digital central bank (MDBC) in the first quarter of 2020. The other countries are still in the phase of reflection and Facebook's libra project seems to have lagged behind its initial goal of a release next year.
As a first step, the MDBC of the Banque de France will be colorless and painless for the common French. The new dematerialized currency will be reserved for interbank transactions and "large accounts". If, for example, a large company wants to borrow large amounts of money, it may use MDBCs that "should, logically, be backed by the euro," said Hugues Morel, president of 99Advisory, a firm advice for financial institutions, contacted by France 24.
Test before the "e-euro" for all?
The advantage is that "the transaction can be faster and more efficient," said Nathalie Janson, an economist and cryptocurrency specialist at the Neoma Business School. A transfer in dematerialized currency can be instantaneous, whereas the same operation in traditional euro is, generally, treated in a few days.
The Banque de France prefers to start with "large accounts" in order to "test the reliability of the system with clearly identified financial players within a narrow and controlled framework, where the problem of money laundering or financing does not arise. unlawful activities, such as terrorism, "said Hugues Morel. One of the main criticisms of Bitcoin is that it is highly prized by international crime, because it allows to circumvent the traditional banking circuits while offering some anonymity.
The objective of the Banque de France remains nonetheless, ultimately, to make available to the general public a dematerialized currency for daily transactions. But this future "e-euro", will not necessarily be "made in France". François Villeroy de Galhau estimated that France could serve as a "laboratory" for a possible European dematerialized European currency that would be led by the European Central Bank. Christine Lagarde, the new director of the ECB, was also very open to the idea of an "e-euro" at its hearing by the European Parliament in September 2019.
France, the vanguard of the response to Facebook's libra
In fact, François Villeroy de Galhau wants France to play the role of a sort of epicenter of the response of European central banks to the "libra threat" of Facebook. The announcement of the upcoming launch of the French MDBC is, in this regard, "as much economic as political", judge Nathalie Janson. "The Bank of France had been thinking for some time about the use of cryptocurrencies, but the boost was given by the Minister of the Economy, Bruno Le Maire, who, after the announcement of the launch of the libra in June 2019, said it was out of the question that Facebook - a private company - [is] ahead of the central banks in a sector that is under national sovereignty ", details the French specialist.
Let us give central banks what belongs to central banks, that is to say, the prerogative to coin money: such seems to be the main motivation of Paris in this case. "The Governor of the Bank of France takes, under the pressure of the Minister of Economy, a precursor position in the hope that other central banks will follow suit," analyzes Hugues Morel.
A revolution that can be expensive
For him, the French MDBC is the reaction of a big beast who sees another super-predator - Facebook - make an incursion into his meadow. But he does justice to the Governor of the Banque de France for having felt the "sense of history". The dematerialization of the currency "is an ineluctable evolution," says the president of 99Advisory. In some countries, such as Sweden, cash is already an endangered species, while others, such as Venezuela or Zimbabwe, are considering the use of cryptocurrencies to offset financial instability. For the experts questioned, if Europe does not get up to speed quickly, the euro could be condemned to play a role of spectator in an international financial system dominated by private actors like Facebook or by states like China. .
But this race for digital currencies is not without risk. The Banque de France warns that MDBC could be expensive for banks. For example: a financial institution "already fragile, could be pushed to bankrupt by important customers who would have decided to empty their accounts to exchange money for safer MDBC and held by the Bank of France," says Nathalie Janson.
Dematerialized currencies also present a challenge for the protection of private data. The use of digital currencies leaves digital traces (each transaction is recorded) "which may be used and exploited for commercial purposes," says Nathalie Janson. The fact that the Banque de France is joining forces with "private innovators" in the sector - that is to say financial start-ups - to develop its MDBC raises the question of who will have access to the data of users of this currency and how this private information will be protected.
And in the end, if the digital currencies really became the future, the public would then face a dilemma. Choose who from a central bank, a multinational like Facebook or an authoritarian regime such as China will have access to its purchase history and banking data.
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