When is the “digital euro”? Faced with the jungle of current cryptocurrencies, States and monetary regulatory authorities are working on digital currencies backed by classic currencies, issued by central banks.
It is in this context that the Banque de France announces that it will continue its experiments with a “digital euro” in a second phase.
“We want to get closer to a viable prototype, test it in practice with more private players and more foreign central banks in the second half of this year and next year”, argued François Villeroy de Galhau, the governor of the Banque de France, yesterday Tuesday.
Less volatile digital currencies
The central bank announced last December that it had “successfully” concluded the first experimental phase of the digital euro. The project dates from the end of 2019, in response to private stablecoin initiatives, such as that of Facebook, which has since given up.
The similarity between these digital currencies issued by central banks and cryptocurrencies like bitcoin or ether is that blockchain technology is used in both cases to enable decentralized and unforgeable exchanges.
The difference is that their volatility should be lower than the price fluctuations of cryptocurrencies, as their value is backed by central bank currencies.
“With unbacked cryptocurrencies, no one is responsible”
Last April, Fabio Panetta, member of the executive board of the ECB (the European Central Bank), in charge of the digital euro project, gave a damning assessment of the state of the cryptocurrency sector.
“With unbacked cryptocurrencies, no one is responsible, and this makes them purely speculative in nature, and therefore very volatile. As in a Ponzi scheme, such a dynamic can only continue as long as an increasing number of investors believe that prices will continue to rise and that there can be value that is not backed by an income stream or guarantee. Until the enthusiasm fades and the bubble bursts. »
With the issuance of CBDCs (central bank digital currencies), central banks want to offer an alternative. “Central banks need to further engage in digital innovation by modernizing wholesale financial infrastructure, operating fast retail payment systems, and preparing for the issuance of central bank digital currencies,” he said. banker.
An international trend
It should be noted that similar initiatives are taking place elsewhere.
Thus, China is testing its national cryptocurrency via a lottery.
The Bank of England is paving the way for “Britcoins”.