ECB Official Advocates Digital Euro to Counter US Dollar Stablecoins

The European Central Bank (ECB) has intensified its warnings regarding the adoption of stablecoins, with a top official advocating for a digital euro to curb the influence of US dollar-pegged stablecoins within the continent. ECB executive board member Piero Cipollone has emphasized the need for a central bank digital currency (CBDC) to preserve the eurozone’s monetary sovereignty in the face of growing popularity of US dollar stablecoins.

In a statement published on the ECB’s official website, Cipollone argued that a potential digital euro “would limit the potential for foreign currency stablecoins to become a common medium of exchange within the euro area.” This stance aligns with previous public statements from Cipollone, who has been a vocal proponent of a digital euro as a strategic response to the dominance of dollar-backed stablecoins in Europe.

Cipollone reiterated that excessive reliance on foreign providers, including stablecoins and international card schemes, compromises Europe’s monetary sovereignty. He underscored the urgent need for a digital euro, stating that failing to act would expose Europe to significant risks and deprive it of a great opportunity. The central banker also expressed concerns about the United States’ increasingly crypto-friendly stance, which could result in further losses of fees and data, as well as the movement of euro deposits to the US and a strengthening of the dollar’s role in cross-border payments.

Cipollone proposed a public-private partnership to retain Europe’s sovereignty, with the digital euro serving as the cornerstone of this partnership. He highlighted the vital role of cash in ensuring financial inclusion and resilience, noting that cash remains a cornerstone of the European financial system and is its only sovereign means of payment. However, the growing preference for digital payments has limited the use of cash, particularly with the rapid growth of online shopping, which now accounts for one-third of European retail transactions.

Cipollone acknowledged that cash cannot be used online and that European payment services are often not available, necessitating reliance on non-European payment systems. He emphasized the urgency of making progress on both the digital euro regulation and the regulation on the legal tender status of cash to increase resilience to possible disruptions and reverse the ever-increasing dependence on foreign companies.

Despite the ECB’s ongoing efforts, the proposed digital euro has faced criticism and skepticism among European consumers, particularly around data privacy concerns. An ECB working paper on the digital euro published in March indicated that European consumers are not interested in adopting a digital euro, with many seeing little value in the potential CBDC.