A recent statement from a European Central Bank (ECB) adviser has raised serious questions about the ability of the digital euro to compete with US dollar-backed stablecoins, signaling a shift in the EU’s digital currency strategy.
Digital Euro Alone May Not Be Enough
According to the ECB blog, adviser Jürgen Schaaf believes that relying solely on a central bank digital currency (CBDC) will not effectively counter the dominance of US dollar stablecoins. Schaaf suggested that the EU must adopt a multi-pronged approach, combining private innovation, regulated euro-denominated stablecoins, and the digital euro project.
“Euro-based stablecoins, if designed to high standards and with proper risk mitigation, could support market needs and enhance the euro’s international role,” Schaaf emphasized.
President @Lagarde explained the importance of developing a digital euro to protect our currency at our July press conference. Our aim is to ensure that our currency is ready for the digital age, and that sovereign money is available in a digital form alongside cash. pic.twitter.com/nO1VMOIEFU
Despite regulatory support like the Markets in Crypto-Assets (MiCA) framework, euro-pegged stablecoins have seen limited adoption. In May, a former ECB official acknowledged that euro-based stablecoins are still not widely used in the financial ecosystem, highlighting a critical lag behind USD-based stablecoins like USDT and USDC.
Embracing Regulated Euro Stablecoins
The ECB now views regulated euro stablecoins as a primary tool to address the US dollar’s growing influence in digital finance. Schaaf warns that ignoring this trend could result in a strategic blind spot for Europe.
“The neutrality of public institutions is often preferred, but passive strategies may prove costly,” he added.
DLT Projects and Future Decision on Digital Euro
In July, the ECB approved two major distributed ledger technology (DLT) pilots — Pontes and Appia — to strengthen Europe’s wholesale and cross-border payment systems. These projects show a broader commitment beyond just the digital euro.
The ECB Governing Council is expected to decide whether to launch the digital euro officially by the end of 2025, after moving the project into its preparation phase in November 2023.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.
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