As China keeps developing its digital yuan, European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau doesn’t think it’s a good sign for the euro, Bloomberg writes.
The Bank of France governor instead wanted other governments to quickly start work on their own efforts.
If not, he said there could be dire consequences for monetary sovereignty.
He said there was a “triangle of risks” around the ECB’s payments control, with the digital yuan just being part of it, along with people using less cash on the whole and crypto assets’ increasing prominence.
But his warnings could be on the right track, as the ECB is currently on the path to make its own digital currency. However, it has said it will decide by July whether it actually plans to move forward, and President Christine Lagarde has said the process might take as long as four years.
China’s digital yuan plans have drawn critiques before — Bloomberg writes that U.S. President Joe Biden’s administration is also keeping an eye on it, looking at what effects it’s having on the U.S. dollar.
To try and soothe peoples’ worries, the Peoples’ Bank of China has said it doesn’t intend for its digital yuan to replace any existing currencies. The efforts, the bank said, are strictly for domestic use.
China has been doing several tests of the digital yuan, with a recent one including a new attempt to pay workers using the digital yuan in the New Area.
That district, which is seated around 60 miles south of Beijing, has been a testing ground for several new fiscal ideas. According to the government there, this was slated to be the first “on chain” payment model used to build wages, and it will be utilizing the Blockchain Fund Platform to pay wages.
This also followed several tests of the digital yuan in various regions in 2020.
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