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The European Union should foster the development of euro-denominated stablecoins to compete with US dollar-denominated tokens, according to Pierre Gramegna, the managing director of the European Stability Mechanism (ESM), an economic crisis organization for the EU.
“Europe should not be dependent on US dollar-denominated stablecoins, which are currently dominating markets,” Gramegna said at Thursday’s hearing about the overall economic health of the eurozone, which included commentary on digital assets. He also said:
“Europe should also embrace the potential for financial Innovation with stablecoins and tokenized assets. Stablecoins are an inevitable part of this equation. In a rapidly evolving financial landscape, Europe should do its best to facilitate the generation of euro-denominated stablecoins by domestic issuers.”
Pierre Gramegna addresses the hearing about the need for euro-denominated stablecoins. Source: European Commission
Paschal Donohoe, the president of the Eurogroup, agreed on the need for financial innovation, but also said that the digital euro, a central bank digital currency (CBDC), could still be a net positive for commerce in the region.
The EU officials agreed that euro stablecoins were necessary in light of the boom enjoyed by dollar-denominated tokens after the passage of the GENIUS regulatory framework in the US, signaling a major shift from earlier rhetoric on the systemic dangers of stables.
Related: Bank of France wants EU crypto regulation under Paris-based ESMA
Digital euro CBDC won’t launch before 2029, says EU central bank official
The digital euro likely won’t launch before 2029, according to European Central Bank (ECB) board member Piero Cipollone, who claimed that EU lawmakers are delaying the process.
Cipollone is one of the strongest supporters of the digital euro and a staunch opponent of privately-issued digital currencies.
In September, Christine Lagarde, president of the ECB, warned that the EU must address risks from foreign stablecoins and fill in regulatory gaps to prevent foreign stablecoin issuers from draining liquidity out of the euro and the EU.
Stablecoins have become a topic of geostrategic importance as governments look to place their fiat currencies on digital rails to maximize demand for their currencies.
Christopher Waller, a US Federal Reserve central bank governor, has repeatedly touted dollar-denominated stablecoins as a way to protect the dollar’s reserve currency status.
“Crypto-assets are de facto traded in US dollars. So, it is likely that any expansion of trading in the DeFi world will simply strengthen the dominant role of the dollar,” Waller said in a 2024 speech.
Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight
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