EU Accelerates Digital Euro Efforts, Spurred by US Stablecoin Law

The European Union is reportedly speeding up its efforts to launch a digital euro, in part by considering the use of a public blockchain rather than a private one.

The shift was prompted by the passage of a stablecoin law in the United States, which has left EU officials concerned that dollar-backed stablecoins could become even more dominant than they already are in cross-border payments, the Financial Times (FT) reported Friday (Aug. 22), citing unnamed sources.

The European Central Bank has been doing work in preparation for a potential digital euro for years, according to the report.

Asked by the FT about the report of an acceleration of those efforts, the ECB said, per the report, that it is considering different technologies for a digital euro and that no decision has been made.

It was reported in March that European Stability Mechanism Managing Director Pierre Gramegna told reporters that Europe’s monetary autonomy and financial stability could be threatened by the President Donald Trump administration’s interest in cryptocurrencies and dollar-denominated stablecoins.

Gramegna said that considering the change in the U.S. perception of digital currencies, the ESM believes that “this digital euro is today more necessary than ever.”

In February, it was reported that the ECB hoped America’s new pro-cryptocurrency attitude could help bring about a digital euro.

Piero Cipollone, a member of the ECB board, said that the ECB was already considering the idea of a digital currency to give Europe an electronic payment method that doesn’t depend on U.S. companies.

Cipollone added that Trump’s support for globally available stablecoins tied to the dollar added yet another U.S.-made payment tool to that list and gave more urgency to the digital euro efforts.

“The political world is becoming more alert to this,” Cipollone said. “And it’s possible that we will see an acceleration in the process.”

Think tank Atlantic Council said in September that 134 countries accounting for 98% of the world’s economy were exploring central bank digital currencies.

“There has been a narrative that the countries that have launched CBDCs have seen low or no usage, but in the last months we have seen a real uptake,” Josh Lipsky, chair, international economics and senior director, GeoEconomics Center at Atlantic Council, said at the time.

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