ECB Pushes Digital Euro to Counter US Stablecoin Growth

ECB Renews Push for Digital Euro

The European Central Bank (ECB) is escalating its concerns about the rising adoption of US dollar-pegged stablecoins. ECB executive board member Piero Cipollone recently published an article emphasizing the need for a digital euro to mitigate the influence of these foreign stablecoins within the eurozone.

Cipollone argues that a digital euro, a central bank digital currency (CBDC), is crucial for preserving the eurozone's monetary sovereignty. He believes it would "limit the potential for foreign currency stablecoins to become a common medium of exchange within the euro area."

Concerns Over US Stablecoin Dominance and Crypto-Friendly Policies

Cipollone's statement follows a series of similar public pronouncements. He's consistently advocated for a digital euro as a strategic countermeasure to the growing dominance of dollar-backed stablecoins in Europe. He's particularly concerned about the US's increasingly crypto-friendly policies, including initiatives to promote dollar-based stablecoins globally.

Cipollone highlights the risk of further losses in fees and data, along with the potential for euro deposits to shift to the US, strengthening the dollar's role in cross-border payments. He proposes a "public-private partnership" with the digital euro as its cornerstone to maintain Europe's monetary sovereignty.

The Role of Cash and the Digital Divide

While acknowledging the vital role of cash in financial inclusion, Cipollone notes that its online limitations are problematic in the era of online shopping, which accounts for one-third of European retail transactions. The lack of readily available European payment options online necessitates reliance on non-European systems, further highlighting the urgency for a digital euro.

Challenges and Public Perception

Despite the ECB's efforts, the proposed digital euro has encountered criticism and skepticism from European consumers, particularly regarding data privacy. Recent ECB research indicates that many Europeans see little value in the digital euro.

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