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 spoke at a Frankfurt-based conference where he claimed stablecoins posed a growing risk to traditional banking systems and currencies.
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.”Also, the law prohibits any federal agency from developing plans for a central-bank digital currency.
Cipollone:
“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 (or stablecoins) are digital tokens which have real assets backing them. This sector’s most significant tokens by market cap are pegged to the US dollar.
Artemis: A New Look The total market capitalization of stablecoins has exceeded $211 billion. This represents a growth rate of 4.2% over the last 30 days. The monthly stablecoin transaction volume was $6 trillion as of Jan. 24.
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.
Banks in the eurozone have however opposed this proposal for fear of losing their deposits to wallets backed up by the ECB. In order to mitigate the problem, the ECB suggests capping digital Euro holdings at a couple of thousand euros.
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.
A report says Publication in DecemberThe ECB plans to begin the development of 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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