Bank of France chief says central banks should control crypto

Bank of France Governor Francois Villeroy de Galhau said on Saturday (Jan. 25) that central banks should be in charge of issuing electronic currency, not private companies, Reuters reported. Partially brought on by the emergence of cryptocurrencies and Facebook's upcoming introduction of the Libra coin, central banks across the globe have been looking into launching eCurrency as a means of maintaining states' control over money.

Villeroy said the plans were not because of Facebook's Libra, but because of the speed of technology and the desire for digital currency by some banks. He noted that private citizens also might ask for cash alternatives.

"In some northern European countries, notably Sweden and the Netherlands, the use of banknotes is falling extremely quickly and they are wondering whether we need to give citizens the right to digital money that is no longer a physical bank note but which has the same quality, notably the security of a central bank," he told France Inter radio, as reported by Reuters. Asked whether such digital money could be issued by private companies, Villeroy said that "currency cannot be private, money is a public good of sovereignty."

He added that "central banks were planning experiments with digital money and that the issue would be studied by the Eurosystem eurozone central banks."

Some central banks are banding together to form a group that will study ways and means of issuing central bank digital currencies (CBDC), according to a release by the Bank of England on Jan. 21.

Collaborating banks include The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements (BIS). "The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums - in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI)," the release said.

The smartphone message going out to customers of Barclays is warm and friendly. "Coming soon," it says, "when you pay someone new, you'll be able to check the name on their account to help make sure you're paying the right person."

How lovely of the banks to be introducing such measures to protect us all. But the reality is that they have had to be cajoled, prodded and generally dragged into taking action. In the meantime, thousands of people have seen their financial lives shattered by frauds, or simple human error, that could so easily have been avoided.

I wrote a Guardian news story titled "Banks act to stop transfer scams and errors", which detailed the radical change banks are taking to tackle "ballooning fraud" and "fat finger" problems.

Three years on, the banks are saying the change is now going to take effect by the end of March this year. So what is this simple step that the banks were talking about three years ago, but which is still "coming soon"?

It is called "confirmation of payee" and means that if you owe me money, and I give you my account number, sort code and name, they will finally check that the three things match up.

The majority of bank customers have long been misled by the bit where you write in, or type in, the person's name when making a transfer. It doesn't matter what you put there. You can write Mickey Mouse and it makes not one jot of difference.

Similarly, if you get just one or two digits wrong on a sort code or account number, then without the name checking, your money can go catastrophically awry, as one Money reader found when he lost his £193,000 inheritance.

It has been a dream for fraudsters. In the worse cases, the crooks intercept an email between a house buyer and their solicitor. So let's say your solicitor is Blodgett and Blodgett, and you get an email from them saying they've moved their account from Barclays to Lloyds, but the account you pay to is still called Blodgett and Blodgett.

It all looks completely authentic, and you send a payment to what you think is the solicitor, carefully writing in the Blodgett names.

In reality, the sort code and account name belong to the fraudster, and the bank never matches it against the Blodgetts'. That's your life savings gone.