The Governor of the French Central Bank warned on Wednesday that if privately issued dollar-pegged stablecoins become the dominant form of tokenized finance, there is a risk that central banks could lose control over currency. This statement comes amid public disagreements among global policymakers and executives in the cryptocurrency industry about who will be responsible for the next phase of the financial system.
At a panel discussion held at the World Economic Forum (WEF), the Governor of the French Central Bank, François Villeroy de Galhau, defined tokenization not merely as a technological upgrade but as a matter of sovereignty. He emphasized that if private digital currencies outpace public money, emerging economies could experience an accelerated dollarization phenomenon.
BIS General Manager Agustín Carstens acknowledged that tokenization would lower costs and improve payments through the delivery-versus-payment mechanism, while emphasizing that currency must remain a public function associated with democratic accountability.
He stated that if a future dominated by private issuers based in the U.S. comes to fruition, it will raise serious questions and challenges for countries that lose monetary autonomy.
To address these risks, Europe is prioritizing wholesale central bank digital currency (CBDC) infrastructure, explaining that it will conduct a pilot focused on financial market payments this year, confirming that it is a project for financial market payments, not retail payments.
Banks as trusted infrastructure
Bill Winters, CEO of Standard Chartered PLC, who participated in the same discussion, said that while most assets will ultimately be settled in digital form, the path will vary according to regulations in over 60 jurisdictions.
He positioned banks as trusted custodians of both financial products and infrastructure, arguing that governments will not easily relinquish control over the financial system's 'pipes'.
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