Europe's Stablecoin Lag Risks Economic Obscurity Warns Société Générale Chairman

Lorenzo Bini Smaghi, Chairman of Société Générale and former member of the European Central Bank, has called for Europe to adopt stablecoins to counter the dominance of the U.S. in the digital financial ecosystem. Bini Smaghi's remarks, made on July 4, 2025, highlight Europe's marginalization in the stablecoin sector, which is currently dominated by U.S. dollar-denominated stablecoins. Despite the European Union's existing crypto regulations, the euro plays a minor role in this booming sector, with less than 1% of the stablecoin market share.

Bini Smaghi warns that Europe risks economic obscurity if it does not promptly integrate stablecoin technology. The Markets in Crypto-Assets (MiCA) regulations, which mandate issuers to hold a majority of reserves in cash and highly liquid bonds, have been developed to safeguard Europe’s financial ecosystem. However, the cautious stance of European banks, which perceive stablecoins as threats to traditional mechanisms, stymies innovation and prevents Europe from capitalizing on the opportunities presented by stablecoins.

Bini Smaghi emphasizes that regulators need to shift their focus from technology to the economic functions and risks presented by these assets. He warns that without immediate action, Europe will miss out on the potential benefits of stablecoins, including quicker innovation and financial stabilization. The lack of regulatory flexibility in Europe has limited the euro's digital presence, hindering its influence on the global crypto stage.

Despite the potential benefits of stablecoins, some regulators have expressed concerns about their adoption. There are warnings that uncoordinated adoption of stablecoins could lead to fragmented monetary systems and undermine public trust in financial systems. Additionally, there are concerns that the boom in stablecoins could undermine traditional banking systems. However, the push for stablecoin adoption in Europe continues, driven by the need to counter U.S. dominance in the digital currency market.

The European Central Bank has approved blockchain projects, such as Pontes Appia, for the digital euro, indicating a broader acceptance of digital currencies within the region. The rise of stablecoins reflects an evolving crypto market landscape, where regulatory changes are driving increased adoption and usage. The comprehensive report highlighted a significant boost in trading pairs liquidity, which is crucial for facilitating large-scale transactions and ensuring market stability. The report points to the MiCA regulations as a key factor for this change, positioning USDC as a preferred asset for institutional traders.

Institutional traders are increasingly turning to stablecoins, as evidenced by a rise in trading volume. The rise of stablecoins, driven by regulatory changes, reflects an evolving crypto market landscape. These developments highlight the increased focus on stablecoin usage in institutional trades, influenced by EU regulations under MiCA. The European Central Bank has also approved blockchain projects, such as Pontes Appia, for the digital euro, indicating a broader acceptance of digital currencies within the region.