French central bank governor Francois Villeroy de Galhau said Europe should give priority to crypto regulation or risk digital assets that challenge its monetary sovereignty.

At a financial conference at Europlace in Paris today, Villeroy said he believed the European Union had “a year or two” to put in place a regulatory framework for cryptocurrencies. In the opinion of the central bank governor, failure to do so would “risk the erosion of our monetary sovereignty” and possibly weaken the euro.

“I have to stress the urgency here: we don’t have a lot of time, a year or two,” said Villeroy. “Both [digital] We have to move currency and payments as quickly as possible in Europe. “

Villeroy has called on the EU to “adopt a regulatory framework in the coming months” given the growing role of cryptocurrencies in regional markets. The use of cash declined in the early months of the pandemic, a trend that, according to Villeroy, could lead to “limited use of central bank money”.

Connected: The Bank of France is closely monitoring stablecoin developments, says Governor

The Governor of the Bank of France previously warned regulators about the potential dangers of cryptocurrencies, including stablecoins and central bank digital currencies, or CBDCs. In September, he said that large tech companies could have the potential to build “private financial infrastructure and a monetary system” – including issuing their own stablecoins – that could negatively affect financial sovereignty in the EU for decades.

In January, the bank completed a pilot program for its own CBDC, then reported that investors had bought and sold simulated stocks worth € 2 million – or $ 2.4 million at the time. The Bank of France announced that it will carry out further test runs for the digital currency this year.