Pierre Gramegna, managing director of the European Stability Mechanism (ESM), states that the European Union needs to promote euro-denominated stablecoins to challenge the dominance of US dollar-denominated tokens. “Europe should not be dependent on US dollar-denominated stablecoins, which are currently dominating markets,” Gramegna expressed during a hearing concerning the eurozone’s overall economic condition, which touched on digital assets. He added:
“Europe should also embrace the potential for financial innovation with stablecoins and tokenized assets. Stablecoins are an inevitable part of this equation. In a rapidly evolving financial landscape, Europe should do its utmost to support the creation of euro-denominated stablecoins by domestic issuers.”
Paschal Donohoe, president of the Eurogroup, concurred on the necessity for financial innovation, noting that the digital euro, a central bank digital currency (CBDC), could significantly benefit commerce in the area.
EU officials recognized the importance of euro stablecoins given the success of dollar-denominated tokens following the implementation of the GENIUS regulatory framework in the US, marking a significant change from previous concerns regarding the systemic risks posed by stablecoins.
Related: Bank of France advocates for EU crypto regulation under Paris-based ESMA
Digital euro CBDC won’t launch before 2029, says EU central bank official
According to European Central Bank (ECB) board member Piero Cipollone, the digital euro is unlikely to debut before 2029 due to delays caused by EU lawmakers.
Cipollone is a strong proponent of the digital euro and a vocal opponent of privately issued digital currencies.
In September, ECB president Christine Lagarde emphasized the need for the EU to tackle risks associated with foreign stablecoins and address regulatory voids to prevent foreign stablecoin issuers from siphoning liquidity from the euro and the EU.
Stablecoins have emerged as a matter of geostrategic significance as governments endeavor to establish their fiat currencies on digital platforms to enhance demand.
US Federal Reserve governor Christopher Waller has continually championed dollar-denominated stablecoins as a mechanism to uphold the dollar’s status as a reserve currency.
“Crypto-assets are de facto traded in US dollars. So, it is likely that any expansion of trading in the DeFi world will simply bolster the dollar’s dominant role,” Waller stated in a 2024 speech.
Magazine: Crypto aimed to disrupt banks, now it’s evolving into them in the stablecoin debate
