A French central banker is recommending a worldwide regulatory structure on cryptocurrency assets.
In a talk at an Official Monetary and Financial Institutions Forum (OMFIF) meeting in London on October 15, Denis Beau, a deputy governor of Banque De France, stated:
“There is indeed a need for overall consistency to prevent regulatory arbitrage under the ‘same activities, same risks, same rules’ principle.”
Also, the best way to guarantee that, he stated, is with a standardized administrative system.
Comparing Libra with central bank-issued digital currencies (CBDC), Beau stated the yet to be introduced coin “may achieve significant market power, thus posing risks to security and financial stability.”
Beau didn’t offer any straightforward answers to Libra’s challenge, other than to take note of the requirement for worldwide guidelines and expectations that central banks will try exploring CBDCs of their own.
He was bullish on the innovation. In a worldwide financial system dependent on expensive, and frequently unwieldy, money transfer instruments, Beau said that distributed ledger innovation “could help remedy” many of the present issues.
In any case, tokens accessible today can’t fill that niche, he said. Digital currencies are commonly too unpredictable and expensive to exchange assets effectively. Also, they do not have the government backing, which is essential to turn them into a reliable store of value, Beau said.
“They can also bring material risks to our payment systems which, if unaddressed, might introduce new sources of fragmentation, instability and fraud.”
That should provide central bankers motivation to consider better approaches to offer their money supply, he stated.
“The potential role of a wholesale CBDC is, in my view, worth considering, if not desirable.”