- Europe has to regulate cryptocurrency soon or face erosion of sovereign monetary systems
- Bank of France governor Francois Villeroy de Galhau made the comments yesterday
- A regulatory framework for cryptocurrencies should be drafted “within months”
Bank of France governor Francois Villeroy de Galhau has said that Europe has “one or two years” to effectively regulate cryptocurrency or risk it challenging sovereign currencies. Villeroy was attending the Paris Europlace Financial Conference yesterday where he discussed the growth in use and adoption of cryptocurrencies, adding that Europe needs to move “as quickly as possible” to establish a regulatory framework. His comments come the same month that El Salvador voted to adopt Bitcoin as a second currency, with Paraguay looking to follow suit.
Europe Needs to Move “As Quickly as Possible”
Cryptocurrency has been on the agenda of European financial conferences and even G7 and G20 meetings in recent years, and this week’s Europlace Financial Conference was no different. The only exception with this particular conference however was that it played out against a backdrop of countries starting to accept Bitcoin as official currencies, which ups the stakes in a way not yet seen.
It was no surprise therefore that a Villeroy struck a note of concern when discussing the need for a regulatory framework to prevent cryptocurrency and DeFi from upending the traditional financial system:
I must stress here the urgency: we do not have much time left, one or two years. On both [digital] currencies and payments, we in Europe need to move as quickly as possible.
Cryptocurrency Threatens Central Bank Money
Villeroy demanded that the EU “adopt a regulatory framework in the coming months”, which is quite a demand given how complex such a framework would be to devise and with coronavirus still dominating the political and public agenda in most countries. Villeroy added that the dramatic decline in use of cash during the pandemic has presented an unforeseen opportunity for digital currencies to flourish, which he warned could lead to “marginalization of the use of central bank money.”