Banque de France Report Calls for More Surveillance on Digital Currency Transactions

A newly-released released report by the French central bank examining the stability of the banking system within in the EU, also mentions blockchains and digital currencies in several of its sub-sections.

The report, Financial Stability In The Digital Age, is a collaboration between Banque de France and many prominent financial experts from various central banks, financial institutions and academics.

Governor of the French central bank, Francois Villeroy De Galhau, mentioned in the first chapter of the report that digital currencies such Bitcoin effectively challenge the central bank’s authority to issue legal tender.

A rough translation reads:

“In seeking to compete legal tender, virtual currencies seem introduce a strong break because they have the ambition to challenge the issuing privilege of central banks.“

Villeroy also points out in the report that the French central bank issued a warning to all consumers in 2013 regarding the risky nature of dabbling in digital currencies, and that this new digital money may “promote circumvention of the rules relating to the fight against money laundering and the financing of terrorism.“

Additionally, he recommends that authorities need to start tracking and compiling figures on exchange activity between fiat and digital currencies, “To better prevent these risks, conversion activity against currency which is legal tender should be analyzed.” writes Villeroy. While the report highlighted the potential issues regarding digital currencies, it also mentioned that cryptocurency volumes and transaction numbers are still quite low within the EU.

But their use is still very low: the amounts exchanged are lower € 100 million per day for volume less than 200 000 transactions, compared to 70 billion euro of payments corresponding to 250 million operations performed every day in the European Union.

In the report, the governor also urged the French central bank and the Financial Stability Board to stay on top of advancements in the blockchain space:

“Furthermore, consideration is being given today the Bank of France, and more widely within Top of the Financial Stability Board to follow the development of initiatives around the technology blockchain , both as regards application possibilities it seems to offer that with respect to the issues raised particularly in terms of security.“

 

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