Europe’s role in global finance could shrink if it continues to hesitate on stablecoin development, warns Lorenzo Bini Smaghi, former executive board member of the European Central Bank (ECB). In a recent statement, he emphasized the urgent need for the EU to back euro-pegged stablecoins or face being left behind in the rapidly evolving digital currency landscape.
Dollar Dominance Threatens European Monetary Sovereignty
The stablecoin sector is growing rapidly, with a total market value of $255 billion, of which $241 billion is dominated by U.S. dollar-backed tokens. According to Bini Smaghi, this imbalance poses a serious risk to the euro’s future relevance.
“If the ECB does not act, Europe will be accepting its marginalization in the future of global finance,” he stated.
He cautioned that widespread use of dollar stablecoins in Europe could lead to capital outflows from eurozone banks, diminishing the ECB’s ability to control interest rates and manage monetary policy effectively.
Europe Has Regulatory Tools, But Lacks Action
The European Union has already established a framework for digital assets under the Markets in Crypto-Assets (MiCA) regulation, which requires stablecoins to be backed by cash and high-quality sovereign bonds. It also supports a pilot program for trading securities on distributed ledgers.
Yet, despite these advances, the euro remains nearly absent from the global stablecoin landscape.
Bini Smaghi argues that this is due to European banks and regulators hesitating to engage with new financial technologies.
A Call to Action: Back Euro Stablecoins Now
To avoid falling further behind, the former ECB official urged European policymakers to actively support euro-pegged stablecoin development. This includes sponsoring new projects, setting technical standards, and modernizing cross-border payments.
Société Générale, where Bini Smaghi currently serves as chair, is one of the few institutions taking steps in this direction. The bank launched its own euro-backed stablecoin in 2023, and more recently issued a dollar-backed token.
Without broader support across the eurozone, however, these efforts may not be enough to protect Europe’s role in global finance.
Conclusion
As stablecoins become a cornerstone of the future financial system, the EU must choose between leadership and irrelevance. According to Bini Smaghi, the time for hesitation has passed—the euro’s future may depend on embracing innovation today.
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