Introduction
In a significant move to reshape the landscape of cryptocurrency oversight within the European Union, the Governor of the Banque de France, François Villeroy de Galhau, has proposed that the European Securities and Markets Authority (ESMA) be empowered as the primary regulatory body for crypto-assets throughout the bloc. This proposal, articulated during his keynote speech at the ACPR-AMF Fintech Forum on October 9, highlights a crucial shift in strategy aimed at fortifying monetary sovereignty against the rising influence of foreign stablecoins.
Regulatory Framework and Concerns
Villeroy de Galhau emphasized the need for a more robust regulatory framework surpassing the existing Markets in Crypto-Assets (MiCA) legislation. He expressed concern that non-European stablecoins pose a substantial risk to the euro and its status as a global currency, advocating for stricter regulations on the issuance of stablecoins both from within and outside the EU.
“This framework would benefit from much more strictly regulating the multi-issue of the same stablecoin,”
he stated, underlining the need for unified European supervision through ESMA to minimize the potential for regulatory arbitrage, particularly in times of economic stress.
Strategic Vision for the Euro
This initiative is part of a broader strategic vision that seeks to secure the euro’s position in an increasingly competitive financial landscape, especially against USD-backed stablecoins that could undermine its role as a preferred settlement currency. Villeroy de Galhau warned that unchecked growth of such digital currencies could lead to diminishing trust and use of the euro in cross-border transactions. To combat these challenges, he suggested that the Banque de France is planning to introduce a “wholesale” digital euro to enhance monetary independence and promote deeper financial integration across Europe.
Ongoing Projects and Initiatives
To achieve these objectives, the French central bank has already initiated projects like Pontes, which facilitate the settlement of tokenized assets in central bank money, and is working towards a more comprehensive system called Appia, which aims to harmonize the interaction of tokenized central bank money, bank deposits, and securities. Villeroy de Galhau emphasized the urgency of this digital currency initiative, stating,
“We must accelerate, and the Banque de France will do everything to contribute to this acceleration.”
Call to Action for European Banks
In parallel to these public efforts, he has also called upon European banks to engage proactively in developing their own tokenized currency solutions, asserting that a central bank digital currency (CBDC) alone would not be sufficient to support the entire ecosystem. While recognizing a budding consortium of nine European banks investigating potential avenues within the tokenized finance space, he stressed that achieving tangible outcomes is more critical than the specific technical implementations of tokenized deposits or stablecoins.
“We could have both,”
he mentioned, cautioning against a scenario where neither option is realized.
