European Union policymakers are discussing the potential launch of the digital euro on public blockchains as they accelerate efforts on the Central Bank Digital Currency (CBDC). This move follows the passage of the Genius Act in the US and concerns over the dominance of dollar-backed stablecoins in cross-border payments, as reported by the Financial Times.
Over the past year, the urgency of the digital euro project has grown amidst geopolitical challenges, such as an increasingly aggressive stance from the United States and worries about Europe’s reliance on Mastercard and Visa.
According to the Financial Times, America’s new stablecoin law caught many in Europe off-guard, further intensifying the pressure to advance the digital euro to mitigate risks associated with US control of cross-border transactions. In response to this perceived threat, officials are contemplating the use of public blockchains, like Ethereum or Solana, for the CBDC’s launch.
While the European Central Bank has previously preferred a private, centrally-controlled system for reasons of security and privacy, launching on public blockchains could enable the digital euro to effectively compete against dollar-backed stablecoins globally.