French Financial Regulator Presents Its Argument in Favor of an EU Digital Currency 

The Autorité des Marchés Financiers (AMF), the financial regulator of France, has called on the top policymakers of the European Union to allow for digital assets to be legalized within the economic region. 

The appeal was published in a working document shared by the regulator towards the end of last month. In it, the financial watchdog explained that digital assets would provide a litany of benefits, including their ability to bolster inter-bank settlements and enhancing the overall efficiency of financial markets across the European Union. 

Blockchain for Financial Inclusion and Economic Growth 

The regulator shared its belief that current market infrastructures remain inefficient, explicitly pointing out that there are still many intermediaries who aren’t as essential as they once were, and which need to be taken out of the entire picture. 

With blockchain technology and digital assets, however, issues such as these will be significantly addressed. Inefficient intermediaries will finally be taken out, while the financial systems of individual countries (and, in the long run, the entire European Union) will finally be able to grow and thrive. 

In the document, the regulator highlighted the need to provide legal clarification for blockchain and digital currencies. It pointed out that banks have had their margins threatened by the cost of post-2008 crisis compliances and low-interest rates. However, with blockchain, these institutions could reduce the amount of money they spend on reconciling their ledgers, thus providing them some financial breathing space and helping them to save money.  

Other benefits of blockchain technology that the regulator outlined include a reduction in the cost of inter-bank transfers, increases in the automation of post-trade processes via smart contracts, increases in execution speed, bolstered security, and a potential increase in the liquidity of asset classes. 

What a Time for the Crypto Industry 

Turning to obstacles, the AMF pointed out that effective legislation will need to be provided, and given that blockchain technology runs on the principle of decentralization, there will be a need to identify a manager to run the Union-wide financial settlement system. 

It also pointed out that there will still be a need for intermediaries, who will act as middlemen between financial institutions and the settlement system itself. The AMF promised to publish a more comprehensive document in the coming weeks, as it is looking to continue driving the conversation on whether digital assets are a necessity in the EU. 

The French regulator is the latest financial policy organization to be making overtures to the international community to pay more attention to the global space to bolster economic progress. China was the star of this movement last year, with the government on the fast track to developing its native digital asset as well. Now, several other governments- including Japan, Sweden, Canada, the United Kingdom, and much more- are reportedly exploring the possibility of launching their digital currencies too.