European officials are intensifying efforts to create a digital euro in light of the recent passage of a stablecoin bill in the United States, which has raised concerns about the competitiveness of the European digital currency. This was reported by the editorial Baltimore Chronicle, with reference to the Financial Times.
The law, passed last month by the U.S. Congress, regulates the $288 billion stablecoin market, primarily dominated by the U.S. dollar. This came as a result of extensive lobbying by the cryptocurrency industry. Stablecoins are digital tokens pegged to national currencies and backed by reserves, such as government bonds.
According to participants in the discussions, following the passage of the so-called Genius Act, EU officials began revising their plans for the digital euro. They are now considering launching it on public blockchains, such as Ethereum or Solana, instead of private ones, as initially planned, due to concerns about privacy. “The rapid adoption of the American law has pushed many to accelerate,” noted one of the sources.
The European Central Bank (ECB) has been working on the digital euro project for several years. It is expected to be free for use within the Eurozone. Supporters of the project believe the digital euro will provide citizens with access to payment systems guaranteed by central banks, as cash usage continues to decline, and will help strengthen the global role of the euro.
The EU is concerned that the new U.S. legislation could fuel further growth in the popularity of dollar-backed tokens, and insists that the digital euro is necessary to maintain the dominance of the single currency across Europe. ECB board member Piero Cipollone warned as early as April that the promotion of dollar-backed stablecoins could threaten Europe’s financial stability and strategic autonomy. He argued that it could lead to an outflow of euro deposits to the U.S. and bolster the dollar’s role in international payments.
Meanwhile, American cryptocurrency companies such as Circle and Tether are already issuing dollar-backed stablecoins, and major banks like Citi and JPMorgan Chase are considering launching their own.
Earlier we wrote that EU transfers 1.6 billion euros to Ukraine from frozen russian assets.