Pierre Gramegna, managing director of the European Stability Mechanism (ESM), stated that the European Union should promote the creation of euro-denominated stablecoins to compete against US dollar-denominated tokens.
“Europe should not rely on US dollar-denominated stablecoins, which currently dominate markets,” Gramegna remarked during a hearing focused on the eurozone’s economic health, where he discussed digital assets. He further stated:
“Europe should also harness the potential for financial innovation with stablecoins and tokenized assets. Stablecoins are a crucial component in this process. In a fast-evolving financial landscape, Europe must facilitate the creation of euro-denominated stablecoins by domestic issuers.”
Paschal Donohoe, president of the Eurogroup, concurred on the need for financial innovation, noting that the digital euro, a central bank digital currency (CBDC), could positively impact commerce in the region.
EU officials recognized the necessity of euro stablecoins, especially given the surge in dollar-denominated tokens following the adoption of the GENIUS regulatory framework in the US, indicating a significant shift from previous concerns about the systemic risks posed by stablecoins.
Related: Bank of France advocates for EU crypto regulation under Paris-based ESMA
Digital euro CBDC unlikely to launch before 2029, says EU central bank official
The digital euro is not expected to launch until 2029, according to European Central Bank (ECB) board member Piero Cipollone, who mentioned that EU lawmakers are causing delays in the process.
Cipollone is a prominent supporter of the digital euro and a critic of privately issued digital currencies.
In September, Christine Lagarde, president of the ECB, warned that the EU must tackle risks associated with foreign stablecoins and address regulatory gaps to prevent foreign issuers from depleting liquidity from the euro and the EU.
Stablecoins have gained significance as governments aim to digitize their fiat currencies to enhance demand for them.
Christopher Waller, a US Federal Reserve central bank governor, has frequently emphasized that dollar-denominated stablecoins could help maintain the dollar’s reserve currency status.
“Crypto-assets are effectively traded in US dollars. Thus, any growth in trading within the DeFi space will likely reinforce the dollar’s dominant role,” Waller noted in a 2024 address.
Magazine: Crypto aimed to disrupt banks, now it is becoming them in the stablecoin debate
