Digital Euro on Public Blockchains Becomes a Geopolitical Necessity

European Union officials are accelerating plans for a digital euro in response to the U.S. passing the GENIUS Act, a regulatory framework for the $288 billion stablecoin market dominated by dollar-pegged tokens like Tether’s USDT and Circle’s USDC. The new law has prompted renewed urgency among policymakers to ensure the euro remains competitive in the rapidly evolving digital currency landscape [1]. The move has raised concerns that dollar-backed stablecoins could strengthen the U.S. dollar’s dominance in cross-border payments, potentially shifting euro deposits into U.S.-based assets and threatening Europe’s financial sovereignty [2].

In a significant shift, EU officials are now considering launching the digital euro on public blockchains such as Ethereum or Solana, rather than the previously favored private infrastructure. The European Central Bank (ECB) had previously leaned toward a private, centrally controlled system to ensure privacy and security, but the U.S. legislation has prompted a reevaluation of decentralized options that could offer greater global interoperability [1]. Running the digital euro on a public blockchain could enhance its adoption and circulation, particularly for cross-border transactions, although concerns remain about transparency and data visibility [3].

The ECB confirmed it is evaluating both centralized and decentralized technologies, including blockchain-based approaches, but no final decision has been made [3]. The debate highlights a broader strategic dilemma for the eurozone, where cash usage is declining and private payment platforms—often foreign-owned—are expanding their influence. While a handful of euro-backed stablecoins, such as Circle’s EURC with a market capitalization of $225 million, already exist, they lack the credibility and scale of a central bank-issued token [2]. A digital euro, by contrast, would represent a direct commitment from the ECB and serve as a reliable public alternative to privately issued payment systems.

The strategic pressure on the EU is intensifying as other major economies advance their own central bank digital currency (CBDC) plans. China has already rolled out its digital yuan at scale, and the U.K. is exploring a "digital pound." These developments underscore the growing global competition in the digital money arena [2]. The ECB’s executive board member, Piero Cipollone, has warned that the expansion of dollar-backed stablecoins risks undermining Europe’s financial stability and autonomy by shifting euro deposits overseas and further embedding the U.S. dollar in international transactions [2].

The push for a digital euro is no longer solely a technological experiment, but a matter of economic and geopolitical necessity. With the U.S. setting a precedent through its regulatory framework, the EU is under pressure to act quickly and decisively to protect the euro’s relevance in a digitizing financial world [2]. The ECB’s openness to public blockchains marks a significant step in this direction, as officials seek a model that balances security, privacy, and global competitiveness. The outcome of these discussions will play a key role in shaping the future of the euro in the digital age.

Source:

[1] U.S. Stablecoin Law Jolts EU Into Rethinking Digital Euro Strategy (https://www.coindesk.com/policy/2025/08/22/u-s-stablecoin-law-jolts-eu-into-rethinking-digital-euro-strategy-ft)

[2] Europe accelerates digital euro plans amid rampant US stablecoins (https://www.paymentscardsandmobile.com/europe-accelerates-digital-euro-plans-amid-rampant-us-stablecoins/)

[3] EU looks at public blockchains like Ethereum and Solana for digital euro (https://cryptobriefing.com/digital-euro-blockchain-eu-plans/)