Pewterer’s Hall, Oat Lane, Barbican, London, London, EC2V 7DE, London
All risks must be properly assessed before central bank digital currencies can become a reality. This requires a co-ordinated, international approach, said Denis Beau, first deputy governor of the Banque de France. He was speaking at an OMFIF City Lecture on the role of crypto-assets in payment systems.
Crypto-assets are growing rapidly in number and variety, said Beau, but they are divisive; some are convinced they could change the international monetary system for the better, others believe they could damage it.
The deputy governor cautioned that crypto-assets present a number of legal, financial, operational and compliance risks which must be addressed to protect financial and monetary stability. While some countries, like China and Russia, have chosen to ban crypto-assets, most European policy-makers have chosen to establish regulations that address the risks, while preserving the potential for innovation.
Beau added that several risks linked to crypto-asset payment arrangements are known already, and legal frameworks simply need to be adapted to address these. That includes the legal qualification of crypto-assets, the venues used to exchange them and the conditions under which a crypto-asset can be exchanged for commercial or central bank money. Any national legislation on the matter, he said, should fit into a larger regulatory framework to ensure fair competition and prevent arbitrage.
The deputy governor underlined the distinction between retail and wholesale CBDCs. While he believed the business case for the former in the euro area was weak, the former could have a role to play in improving settlement processes. Either way, central banks should not refrain from experimenting with digital currencies.
Pressed further, Beau insisted that without a full analysis of their impact, it is impossible to determine whether CBDCs will be permitted. Nevertheless, he added, with the G7 and the Financial Stability Board both looking into the issues raised by crypto-assets, they should be seen as promising.
Click here to read Denis Beau’s full speech.
Oat Lane, Barbican
London, EC2V 7DE
11:00 – 11:30: Registration
11:30 – 13:00: City lecture