tl;dr
ECB board member Piero Cipollone urges European Central Bank to fast-track digital euro in response to President Trump's promotion of dollar-backed stablecoins. Cipollone warns of stablecoins posing a threat to traditional banking and monetary systems. ECB's digital euro plans face opposition from e...
ECB urged to fast-track digital euro amid Trump’s stablecoin push - Eurozone
Eurozone urged to accelerate digital euro launch in response to Trump's push for dollar-backed stablecoins. Digital euro seen as response to threat posed by stablecoins and potential disintermediation of banks. ECB's digital euro plans face opposition from eurozone banks fearing loss of deposits. ECB to develop digital euro prototype this year to ensure Eurozone's financial system competitiveness.
ECB board member Piero Cipollone urges European Central Bank to fast-track digital euro in response to President Trump's promotion of dollar-backed stablecoins. Cipollone warns of stablecoins posing a threat to traditional banking and monetary systems. ECB's digital euro plans face opposition from eurozone banks. ECB aims to develop digital euro prototype this year to ensure Eurozone's financial system competitiveness. Other countries are already launching or piloting digital currencies. Total stablecoin market cap surpasses $211 billion with a monthly transaction volume over $6 trillion as of Jan. 24.
ECB board member Piero Cipollone said the European Central Bank (ECB) must accelerate efforts to launch a digital euro in response to President Donald Trump’s push to promote dollar-backed stablecoins globally, Reuters reported on Jan. 24. Cipollone made the statement while speaking at a conference in Frankfurt, where he also claimed that stablecoins pose a growing threat to traditional banking and monetary systems.
Trump’s executive order, issued on Jan. 23, laid out a strategy to promote the “development and growth of lawful and legitimate dollar-backed stablecoins worldwide.” Additionally, it prohibits federal agencies from advancing plans related to a central bank digital currency (CBDC).
Cipollone said: “I guess the key word 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.”
Stablecoins are tokens backed by real-world assets. This sector’s most significant tokens by market cap are pegged to the US dollar. Based on Artemis data, the total stablecoin market cap has surpassed $211 billion, a 4.2% increase over the past 30 days. Meanwhile, as of Jan. 24, the monthly transaction volume for stablecoins was over $6 trillion.
DIVERGENT PATHS
In response to the expansion of the digital dollar, the ECB is experimenting with the concept of a digital euro — a central bank digital currency (CBDC) backed by the ECB and operated by private institutions like banks. However, eurozone banks have opposed the proposal, fearing they will lose deposits to ECB-backed wallets. To mitigate this, the ECB has suggested capping digital euro holdings at a few thousand euros and ensuring they are not interest-bearing.
The ECB’s plans are contingent on European lawmakers passing enabling legislation, after which a final decision will be made. According to the Atlantic Council, 11 countries, including Nigeria, Jamaica, and the Bahamas, have already launched digital currencies, while 44 others — including China, Russia, and Brazil — are conducting pilot projects.
According to a report published in December, the ECB is set to start developing its prototype for the digital euro this year. Notably, the report emphasizes that the digital euro is a tool that can ensure the future competitiveness of the Eurozone’s financial system.