ECB board member Piero Cipollone said the European Central Bank (ECB) must accelerate efforts to launch a digital euro in response to President Donald Trump’s 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.
Trump’s 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… That’s why we need a digital euro.”
Stablecoins are tokens backed by real-world assets. This sector’s 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 ECB’s 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 Eurozone’s financial system.
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