For some time, France has been determined to overtake London as the leading center of European finance. This latest move could end up helping them do just that.
France has traditionally taken a very hard stance when it comes to the trade and advertisement of leveraged financial instruments such as CFDs and Forex pairs. It still wants to be a leading blockchain financial center, however, a decidedly untraditional move. In a statement to the press, French Finance Minister Bruno Le Maire commented on the decision to allow trade in :
The use of this new technology will allow fintech firms and other financial actors to develop new ways of trading securities that are faster, cheaper, more transparent and safer.
He also added that the proposed rules would be “another asset for Paris’ attractiveness as a financial center.”
If it becomes law, the new rules will make it possible for fintech companies and banks to set up platforms based on blockchain where unlisted securities can be traded. This will cut out the middlemen such as custodian banks and brokers.
However, these rules are not expected to have any impact on listed securities. They will still continue to trade on financial exchanges as normal. The listed securities will need to go through clearinghouses and custodians as they have done in the past.
Brexit and the New Financial Arms Race
One reason why France is making such a bold move is Brexit. In the wake of the UK’s withdrawal from the EU, much uncertainty has surrounded UK-based financial institutions serving continental Europe. This has created an arms race for secondary financial centers throughout Europe. Places such as Paris, Dublin, Milan, and Frankfurt are jockeying to make themselves attractive to financial giants operating on the continent.
Despite their current efforts, however, most of these places are still a long way from becoming leading financial centers that can supplant London. Regardless, they will no doubt manage to attract some increased financial activity because of the fallout from Brexit. The decision by France to use blockchain for unlisted securities is a move in this direction. They are clearly aiming to make the most out of this situation and are doing what it takes to get the edge over their competitors.
Will this latest move by France make the country more attractive to the financial world? Do you think allowing blockchain technology in its financial system is the right move? Let us know in the comments below.
Images courtesy of EPA, AdobeStock
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