As the European Central Bank (ECB) approaches the completion of the testing phase for a digital euro by October, a high-ranking EU official highlights the urgency of the project in light of the U.S. adoption of stablecoins during the Trump administration.
The ECB has been focused on developing a digital euro for several years, having entered the preparation phase in late 2023, with a final decision on the potential rollout of a central bank digital currency (CBDC) expected by year-end.
In a recent statement, ECB President Christine Lagarde emphasized the need for a timely decision, noting, "I think it is critically important, and for the agnostics or the sceptics, it now seems more relevant and more imperative than ever before, both on the wholesale and retail levels."
Her remarks follow concerns from lawmakers regarding the ECB’s project, particularly after a recent outage in the Target 2 payment system raised questions about the central bank’s reliability. Markus Ferber of the European People’s Party stated to Reuters, "This instance is a blow to the ECB’s credibility. People will ask legitimate questions about how the ECB will manage a digital euro when it cannot even keep its day-to-day operations running smoothly."
Conversely, Pierre Gramegna, managing director of the European Stability Mechanism, has urged swift action to support the introduction of a CBDC. He expressed concern that the Trump administration’s support for cryptocurrencies, particularly stablecoins, could dramatically influence Europe’s financial landscape.
Gramegna explained to reporters that this U.S. approach "could eventually reignite foreign and U.S. tech giants’ plans to launch mass payment solutions based on dollar-denominated stablecoins," which, if successful, could threaten the euro area’s monetary sovereignty and financial stability. He underscored his organization’s support for the ECB’s push to make a digital euro a reality, emphasizing that it is essential for safeguarding Europe’s strategic autonomy.
His remarks on Big Tech seem to reference Meta’s attempts to develop a stablecoin, Diem, for a digital wallet, which ultimately succumbed to regulatory challenges.