ECB Adviser Doubts Digital Euro Can Match US Dollar Stablecoins

A European Central Bank (ECB) adviser has expressed skepticism about the digital euro’s ability to rival the dominance of U.S. dollar-pegged stablecoins, emphasizing that a central bank digital currency (CBDC) alone may insufficiently counter the growing influence of private-sector alternatives. In a blog post published on the ECB’s website, adviser Jürgen Schaaf outlined a multi-pronged strategy for the European Union to address the rise of dollar-based stablecoins, including regulated euro-pegged stablecoins, distributed ledger technology (DLT), and the development of the digital euro. Schaaf argued that stablecoins—rather than the digital euro—could be the EU’s most effective response to U.S. leadership in this space, provided they are designed with high standards and robust risk mitigation [1].

Schaaf’s comments reflect concerns about the slow adoption of euro-based stablecoins, despite regulatory frameworks like the EU’s Markets in Crypto-Assets (MiCA) law. Bank of Italy Governor Fabio Panetta, a former ECB official, noted in May that euro-pegged stablecoins remain limited in circulation, even as MiCA aims to promote their use. Panetta highlighted the digital euro’s potential to address this gap, suggesting it could serve as a counterweight to the dominance of U.S. stablecoins [1]. However, Schaaf positioned the digital euro as one component of a broader digital payments strategy, alongside private innovation and DLT applications, which he argued could enhance domestic and cross-border transactions [1].

The ECB’s cautious approach underscores broader tensions between public and private efforts to digitize money. While stablecoins—backed by traditional reserves like the U.S. dollar—benefit from existing infrastructure and widespread adoption, the digital euro faces challenges in competing with their agility and user incentives. Schaaf acknowledged that the digital euro, as a CBDC, may lack the flexibility to rival private-sector solutions like Tether or USD Coin, which leverage the dollar’s global dominance and established networks [1]. The ECB has previously warned that the proliferation of stablecoins could erode its ability to implement monetary policy effectively, particularly if such assets gain traction in retail transactions and cross-border settlements [2].

The debate over the digital euro’s role is intertwined with global efforts to regulate stablecoins. Schaaf highlighted disparities between the U.S. GENIUS Act and the EU’s MiCA framework, stressing the need for stronger international coordination. The ECB’s digital euro project, currently in the preparation phase, aims to create a digital form of legal tender that coexists with cash. However, a decision on whether to proceed with its launch will not be made until the end of 2025, according to the ECB [1]. Meanwhile, the approval of DLT pilot projects like Pontes and Appia in July signals the ECB’s interest in leveraging technology to strengthen payment infrastructure [1].

Schaaf’s remarks reflect a pragmatic acknowledgment of the hurdles facing the digital euro. While the ECB seeks to preserve the euro’s role in a digitizing economy, the adviser’s analysis suggests that a single initiative—such as a CBDC—may not suffice to counter the disruptive potential of stablecoins. Instead, the EU must balance innovation with the need to maintain monetary sovereignty, a challenge shared by policymakers worldwide as stablecoins reshape global finance [1].

Sources:

[1] [ECB Adviser Doubts Digital Euro Can Match US Dollar Stablecoins] https://cointelegraph.com/news/digital-euro-alone-curb-usd-stablecoin-rise-ecb-adviser

[2] [European Central Bank Warns About Stablecoin Risks] https://www.moomoo.com/news/post/56008324/the-european-central-bank-ecb-has-warned-that-the-rise