ECB eyes Trump plan to support cryptocurrencies
The ECB hopes Trump’s support for stablecoins will accelerate EU efforts to finalize digital euro legislation by summer 2025.
[:en]Photo: Reuters[:]
The European Central Bank (ECB) hopes that US President Donald Trump’s plan to support cryptocurrencies pegged to the US dollar will accelerate legislative support for a digital euro, ECB board member Piero Cipollone said, reported by Reuters.
The ECB has unveiled its digital currency – essentially an online wallet backed by the central bank. It is also an electronic payment method that does not rely on dominant US providers such as Visa and PayPal. Nigeria, Jamaica and the Bahamas have already launched a central bank digital currency (CBDC), and 44 other countries, including China, Australia and Brazil, are implementing pilot projects
EU Parliament and Council to legalise digital euro by summer
The European Commission proposed legislation on a digital euro in June 2023, but little has happened since then due to scepticism from some lawmakers and bankers. It is possible that we will now see this process accelerated.
Cipollone had hoped that the EU Parliament and Council would finalise the digital euro legislation by the summer, paving the way for negotiations with the Commission. This would allow work on the new rules to be completed by November, when ECB policymakers are due to vote on whether to launch the digital currency.
Trump’s support for stablecoins
Trump’s support for a globally available dollar-pegged stablecoin would help create another US-made payment instrument and add urgency to the digital euro project. Like money market funds, stablecoins offer short-term interest rates in fiat currency, but they can also be used to make payments. The spread of US stablecoins as a means of payment is a concern, as it risks diverting deposits away from European banks.
If people in Europe start using stablecoins for payment, given that most of them are American and dollar-based, they will move their deposits from Europe to the United States. Bankers fear that a digital euro will similarly devastate them as customers move some of their cash into a safe wallet guaranteed by the ECB.
