The Governor of the French Central Bank, François Villeroy de Galhau, has suggested that recent events in the cryptocurrency market characterized by massive sell-offs have caused people to trust banks more than digital currencies.
Speaking during a session at the World Economic Forum on June 26, Villeroy underline that the change could be due to the private nature of cryptocurrencies which he says do not foster trust. Therefore, he noted that citizens might seek to align themselves with products that promote trust, such as central bank digital currencies (CBDCs).
According to the governor, cryptocurrencies are unreliable because they lack an entity responsible for their value. In that line, Villeroy noted that trust issues would likely accelerate the development of CBDCs.
“In recent weeks, citizens have lost confidence in cryptos, but more than in central banks without a doubt No one is responsible for the value of cryptos and it should be universally accepted as a medium of exchange,” he said.
Confidence in banks despite high inflation
Interestingly, the official argued that confidence still exists in banks despite the fact that most central banks are blamed for soaring inflation.
During the session, Villeroy emphasized the need for central banks and the private sector to work together in the design of CBDCs. He suggested that banks provide trust while the private sector provides much-needed technology.
Previously, the governor hailed bitcoin for introducing innovative technology, but the institution has maintained a skeptical approach to cryptocurrencies.
Notably, the crypto market traded in the red zone in 2022, with Bitcoin leading the losses. The flagship cryptocurrency is currently struggling to hold its price above $20,000.
However, the market made small gains aimed at reclaiming the $1 trillion market cap, while Bitcoin’s value jumped at least 1% in the past 24 hours to trade at $21,400 in press time.
Apart from the price crash, the market has also been hit by controversies such as the Terra (LUNA) ecosystem crash which resulted in major losses for investors.
The incident raised questions about the triggers for the collapse. For example, founder Do Kwon is facing allegations of fraud in the collapse.
Watch the full interview below: