ECB Adviser Casts Doubt on Digital Euro Rivaling USD Stablecoin Rise

A senior European Central Bank (ECB) adviser has cast doubt on the digital euro’s ability to rival US dollar-pegged stablecoins, arguing that a central bank digital currency (CBDC) alone lacks the infrastructure and user adoption to compete effectively. Jürgen Schaaf, an ECB advisor, outlined this perspective in a blog post published on the ECB’s website, emphasizing the need for a broader strategic approach to address the rising influence of dollar-based stablecoins. He highlighted the potential of regulated euro-pegged stablecoins, distributed ledger technology (DLT) applications, and coordinated global regulation as complementary tools to safeguard European monetary sovereignty [1].

Schaaf’s comments underscore a growing concern within the ECB about the threat stablecoins pose to the eurozone’s monetary dominance. While the digital euro is seen as a critical project to modernize Europe’s financial ecosystem, the adviser warned that its success hinges on public trust and regulatory frameworks that may lag behind private-sector innovation. This gap raises questions about how the ECB can position the digital euro to meet user needs already fulfilled by stablecoins, which leverage existing private infrastructure and global demand [1].

The adviser also pointed to the slow adoption of euro-pegged stablecoins as a challenge, noting that frameworks like the EU’s Markets in Crypto-Assets (MiCA) regulation have not yet spurred significant circulation. Bank of Italy Governor Fabio Panetta, a former ECB official, previously remarked that euro-pegged stablecoins remain limited in usage despite regulatory efforts. This has led to calls for the digital euro to play a pivotal role in addressing adoption barriers, as it could provide a secure and universally accessible alternative to private solutions [1].

Schaaf’s strategy goes beyond the digital euro, framing it as one of three pillars—alongside private innovation and DLT applications—to reinforce European monetary sovereignty. He emphasized the potential of DLT to enhance domestic wholesale and cross-border payments, citing the ECB’s recent approval of two DLT pilot projects (Pontes and Appia) aimed at strengthening payment infrastructure. These initiatives reflect the ECB’s broader recognition that no single solution can counter the dominance of US dollar stablecoins [1].

The ECB’s cautious approach to the digital euro has been a recurring theme among officials. While the project moved into the “preparation phase” in November 2023, a decision on its launch remains pending. The ECB Governing Council is expected to decide whether to advance the project by the end of 2025. Officials, including board member Piero Cipollone, have argued that the digital euro could help preserve the eurozone’s monetary sovereignty, particularly as private-sector solutions increasingly facilitate cross-border transactions with lower costs and faster settlements [1].

The adviser’s skepticism aligns with broader ECB warnings about the risks posed by stablecoins. By diverting transactional activity into privately managed systems, stablecoins could reduce the ECB’s influence over monetary policy, including money supply and interest rate dynamics. This risk is amplified by the minimal oversight of stablecoins compared to state-backed digital currencies. The ECB has repeatedly stressed that the digital euro is not a direct response to stablecoins but a strategic initiative to enhance the euro’s resilience in a rapidly evolving financial landscape [1].

Despite these challenges, the ECB remains committed to advancing the digital euro while acknowledging the urgency of addressing stablecoins’ growing footprint. The adviser’s remarks suggest that the central bank recognizes the need for a multi-pronged strategy to compete with private-sector innovation, balancing the digital euro’s role in financial inclusion with the functional advantages of stablecoins. The outcome will hinge on the ECB’s ability to align the digital euro with user expectations while reinforcing the euro’s position in global payments.

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] [The European Central Bank (ECB) has warned that the rise] [https://www.moomoo.com/news/post/56008324/the-european-central-bank-ecb-has-warned-that-the-rise]