Digital euro vital for monetary sovereignty, says BDF Governor
Emmanuel Moulin, Governor of the Banque de France, emphasized the need for central banks to actively shape monetary innovation. Speaking at VivaTech, he stated that extending the euro into the digital world is crucial to preserve monetary sovereignty and financial stability.
From cash to tokenised assets
The payments ecosystem is undergoing significant shifts, with cash use gradually declining while digital payments, particularly card and mobile transactions, expand.
France recorded 33 billion cashless payment transactions in 2024, a 5.2% increase, with cards accounting for 62% of non-cash payments, up from 45% in 2014.
Simultaneously, financial assets are being digitalized through tokenisation, which involves representing assets or deposits on a distributed ledger technology (DLT).
This process integrates messaging, reconciliation, and asset transfer into a single operation, promising efficiency gains by reducing settlement times and transaction costs, and enabling smart contracts and delivery-versus-payment mechanisms.
Tokenisation is seen as the next logical step in the evolution of the monetary and financial system, opening new avenues for cross-border payments and securities markets.
Sovereignty at stake in digital shift
Digitalisation introduces new risks to monetary sovereignty and financial stability.
Europe's retail payments heavily rely on non-European card schemes, which account for nearly two-thirds of euro area card payments.
Stablecoins, with market capitalisation surging from USD 5 billion in 2019 to USD 300 billion in 2026 and predominantly dollar-backed, pose a significant risk of digital dollarisation and money privatisation.
This could weaken monetary policy transmission, heighten financial stability risks, and raise AML concerns.
Europe must therefore actively shape monetary innovation to safeguard its independence.
Sovereignty demands swift action
Europe's strategic push for digital monetary sovereignty is essential, but its success hinges on decisive action.
The digital euro and wholesale CBDC initiatives are vital, yet fragmented regulation of non-euro stablecoins remains a critical weakness.
Robust, consistent European supervision is paramount to prevent arbitrage and truly anchor innovation in the euro's stability.