French central bank vice president wants to use blockchain to improve financial system

The deputy head of the French central bank wants to use the blockchain technology to improve the European financial system, especially when it comes to payment processing.

The statement was made by Denis Beau, deputy head of the French central bank, at an annual conference of the Association of Capital Markets Professionals (AFME) on 21 November, when he spoke about the legal conditions for innovation and growth in Europe’s capital markets.

 

Financial system could benefit from blockchain

In his speech, Beau explicitly stressed that the use of blockchain technology could have a positive effect on the financial system:

“The tokenisation of assets, in combination with block-chain-based systems that enable the transfer of such assets, could enable us to better respond to market demands”.

“Tokenization” means the breaking down of assets (e.g. real estate) into digital parts in order to place them on the market more efficiently. The aim is to create benefits for both investors and providers.

In addition, Beau sees blockchain technology as an opportunity to optimize payment processing within the financial system. He therefore calls on the Eurosystem to experiment with the technology in order to improve the way in which European central banks make money available as a payment instrument. That is what Beau says:

“We at the French central bank, together with the ECB and other European central banks, are very open to such experiments, especially as regards a possible central bank digital currency to process payments within the banking system.

 

Possible risks

However, France’s Vice-President of the Central Bank admits that the use of blockchain technology naturally involves risks. For example, there could be “very different ways of using payment methods”.

In mid-October, Beau had already warned that the banking system might be facing drastic changes, which will be heralded in particular by blockchain technology:

“The emergence of so-called crypto currencies and stablecoins could ensure that completely new payment instruments establish themselves on the market, possibly in direct competition with the national currencies issued by central banks, which are actually the cornerstones of our payment systems.