The U.S. jumpstarted cryptocurrency and blockchain regulation a few years ago, however, the economic superpower does not plan to create a digital dollar for now according to the Federal Reserve’s chairman. On the other side of the world, both China and the EU actively develop their national cryptocurrencies categorized as central bank digital currencies (CBDCs), which may be the first digital assets to be used by financial institutions.
The Bank of France will be the first central bank in Europe to officially test an EU CBDC starting from the first quarter next year. The news is reported by French news media Les Echo on the 4th of December and the information was made public by the governor of the central bank, François Villeroy de Galhau. According to Galhau, the bank will commence testing the digital euro by the end of the first quarter.
The news was also shared by the central bank’s official Twitter account, which added that the news was made public during a conference hosted by two of the most important financial regulators in France, Resolution Authority and the Autorité des marchés financiers and the French Prudential Supervision.
However, the pilot project will only entail private financial sector players and it will not be available to retail customers. Galhau added that a digital euro targeted at retail customers would be under stricter oversight, claiming that it would ‘be subject to special vigilance.’ Furthermore, the decision was made in order to make the French financial system stronger and to increase the currency’s trust.
An EU CBDC as a protection against Libra
During the previous summer, numerous European officials stated that a digital global cryptocurrency such as Libra would not be welcome on European soil, as it had the potential to destabilize the continent’s monetary system. These complaints are not specific only to Europe, but to the rest of the world as even U.S. representatives stated that the project would negatively impact the dollar.
With that in regard, Galhau stated that testing the digital euro would protect French sovereignty against digital asset solutions such as Libra. Galhau also backs the statement that the the minister of finance Bruno Le Maire made regarding Libra, the first French official to publicly denounce the project. Taking a wider look at Europe, some reports claim that France led an anti-Libra coalition with a number of EU countries, including Italy, Germany, Netherlands, and Spain.