The EU must approve a digital euro to counteract the White House’s push for stablecoins. ECB board member Piero Cipollone proposed to double down on this digital currency, as the union will need to contend with the promotion of U.S.-backed dollar stablecoins on a global scale.
EU to Answer Trump's Stablecoin Push With Digital Euro
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EU Props Digital Euro to Counteract Future Stablecoin Rise
The Trump administration’s recent digital assets push is taking the world by storm, influencing digital assets’ policies and programs in other regions. One of these is the European Union (EU), which is currently evaluating the feasibility of a digital euro.
According to the “Strengthening American Leadership in Digital Financial Technology” executive order, the U.S. will “promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.”
Read more: Trump’s Executive Order Rejects CBDCs, Considers Crypto Reserves, and Aims to Revamp Regulations
This has worried the European Central Bank (ECB) board, which feels there needs to be a counter to the U.S. dollar going global. Reuters noted that ECB board member Piero Cipollone opposed this proposal, stating that it would hurt the traditional finance world by promoting bankless solutions.
He stated:
I guess the keyword here is worldwide. This solution, you all know, further disintermediates banks as they lose fees, they lose clients. That’s why we need a digital euro.
While dollar-pegged stablecoins can function outside the traditional finance spheres, the digital euro is proposed to act in line with banks. These would facilitate deposits of a limited number of euros to a digital wallet to pay for goods or services.
Trump has rebuffed taking a similar approach in the U.S. In the same digital assets-focused executive order, Trump bars the creation of any central bank digital currency ( CBDC). He states that launching such a currency would “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.”
Stablecoins are proving to be one of the key use cases of cryptocurrency. The market cap of stablecoins has recently hit a milestone, reaching a historic high of $213 billion. Almost $140 billion of this value is commanded by USDT, Tether’s prime stablecoin.
Read more: Stablecoin Market Cap Hits Historic High of $213 Billion
