China digital currency: e-yuan part of ‘triangle of risks’ challenging international role of euro
- China’s plan to create a digital version of the yuan has drawn scrutiny from governments and central banks alike
- European Central Bank Governing Council member Francois Villeroy de Galhau urged policymakers in Europe to act quickly on their own equivalent efforts
China’s rapid progress in developing a digital yuan poses a key risk in preserving the euro’s international role, said European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau.
The Bank of France Governor urged policymakers in Europe to act quickly on their own equivalent efforts and more innovative payment solutions, “or risk an erosion of our monetary sovereignty – something we cannot tolerate”.
He also highlighted the declining use of cash and the rise of cryptoassets.
The risk is clearly that Europe will lose momentum not just in its drive to strengthen the international role of the euro, but even in preserving it
“The risk is clearly that Europe will lose momentum not just in its drive to strengthen the international role of the euro, but even in preserving it,” he said at an event in Paris on Tuesday. “The challenge here is also a geopolitical concern.”
The ECB is among central banks taking the fastest steps with their own such efforts, though it will not officially decide until July whether to move forward with practical experiments.
While its researchers have warned over taking longer than other monetary authorities, ECB President Christine Lagarde has said the project may take about four years.
Villeroy argued in his remarks that the ECB must study both retail uses as well as “wholesale” or “interbank” forms of any potential digital euro, as the latter would be vital to cross-border transactions.
