ECB urged to fast-track digital euro amid Trumps stablecoin push
ECB board member Piero Cipollone said the European Central Bank (ECB) must accelerate efforts to launch a digital euro in response to President Donald Trumps push to promote dollar-backed stablecoins globally, Reuters reported on Jan. 24.
Cipollone made the statement while speaking at a conference in Frankfurt, where he also claimed that stablecoins pose a growing threat to traditional banking and monetary systems.
Trumps executive order, issued on Jan. 23, laid out a strategy to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide. Additionally, it prohibits federal agencies from advancing plans related to a central bank digital currency (CBDC).
Cipollone said:
I guess the key word here is worldwide. This solution, you all know, further disintermediates banks as they lose fees, they lose clients Thats why we need a digital euro.
Stablecoins are tokens backed by real-world assets. This sectors most significant tokens by market cap are pegged to the US dollar.
Based on Artemis data, the total stablecoin market cap has surpassed $211 billion, a 4.2% increase over the past 30 days. Meanwhile, as of Jan. 24, the monthly transaction volume for stablecoins was over $6 trillion.
Divergent paths
In response to the expansion of the digital dollar, the ECB is experimenting with the concept of a digital euro a central bank digital currency (CBDC) backed by the ECB and operated by private institutions like banks.
However, eurozone banks have opposed the proposal, fearing they will lose deposits to ECB-backed wallets. To mitigate this, the ECB has suggested capping digital euro holdings at a few thousand euros and ensuring they are not interest-bearing.
The ECBs plans are contingent on European lawmakers passing enabling legislation, after which a final decision will be made.
According to the Atlantic Council, 11 countries, including Nigeria, Jamaica, and the Bahamas, have already launched digital currencies, while 44 others including China, Russia, and Brazil are conducting pilot projects.
According to a report published in December, the ECB is set to start developing its prototype for the digital euro this year. Notably, the report emphasizes that the digital euro is a tool that can ensure the future competitiveness of the Eurozones financial system.
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Text source: CryptoSlate
