2021 paris europlace – studio gabriel, paris roads for the future : central bank digital currency ( cbdc ) and innovative payments closing address by francois villeroy de galhau, governor of the banque de france ladies and gentlemen, it is a pleasure to be with you today streamed live from studio gabriel. i would like to extend my warmest thanks to paris europlace for having maintained through the crisis this fruitful dialogue with all stakeholders. before turning to my main point today, i want to stress the resilience of our french financial institutions, which have played a decisive role in helping our economy weather the crisis. it was popular a year ago to predict a financial apocalypse, and certain europeans, prone to self - flagellation, are still doing so today, whereas the americans are more self - confident. the reality speaks for itself : french banks ’ cet1 was higher at the end of the first quarter of 2021 ( 15 % ) than it was before the crisis ; their profitability, however still insufficient, has improved sharply in this q1 ; in general, french banks are in no way underprovisioned. france and europe are not facing a “ tsunami of bankruptcies ”, and should, on the contrary, see a strong recovery : cumulative growth of more than 10 % over 2021 and 2022. so we need to remain vigilant, but let ’ s stop scaring ourselves. this roughly reassuring situation is in no way a call for complacency and status quo. the covid - 19 crisis is acting as an accelerator for the major structural challenges banks and insurers are facing. these challenges are also putting creative pressure on central banks and supervisors. and i will elaborate today on how to catalyse our efforts together on one “ road for the future ” towards innovative payments and cbdc. i. cbdc and innovative payments : next steps ahead once regarded as the " plumbing " behind the financial system, attitudes to a cbdc and to payments in general have dramatically changed over the past 18 months ; and these issues are now at the top of the central banking agenda. as is often the case with major innovations, reactions to the idea of a cbdc are very mixed. let me start by clarifying one major point : no decision has been taken at this stage on whether or not to create a digital euro. and before any such decision is made, rest assured that all necessary analysis will be properly conducted. it is with this

first, and much earlier, we need to regulate crypto - assets, and then implement epi. the third and final action : be ready to launch a general purpose cbdc, which means for the public and for the financial sector, to reassert the anchoring role of central bank money in case of need. let me insist on the dual purpose : public attention is naturally focused on a retail digital currency, for individuals and firms. but a “ wholesale ” or “ interbank ” form is also important, particularly as the use cases are already even more obvious, and because this interbank money will be vital for cross - border transactions. the next investigation phase and technological prototypes selected by the eurosystem will, in my view, need to cover both these functions, separately or together. the results of the ecb ’ s public consultation, published mid - april, show that european citizens regard two aspects as particularly important : privacy and security. therefore, the retail cbdc would be made available to citizens as an easy - to - use, secure and accessible payment instrument, that protects user privacy and can be used for all types of payment. how would it be distributed? we want to develop a model where cbdc is distributed by intermediaries, to allow private players, first and foremost the banking sector, to keep a key role. let me be clear on this : it is not the banque de france ’ s or any central bank ’ s role to open bank accounts! we closed the last ones almost 20 years ago. client relationships will remain the preserve of private players, to which central banks will provide the central bank money. there are also fears that cbdc accounts will “ drain ” commercial deposits and dry up bank liquidity. no : as i see it, they will offer no greater advantage in terms of remuneration, and there will have to be a limited amount that can be held in them. in addition, the ecb has shown that it is more than capable of safeguarding bank liquidity … if the cbdc is going to replace any liquid financial assets, then it is more likely to be banknotes in the long run and crypto - assets. in short, the scenario of a cbdc causing massive bank disintermediation is more a finance - fiction fantasy than a serious analysis. the “ interbank ” or “ wholesale ” cbdc would enable the efficient and secure settlement of transactions. we, as banque de france, have