ECB board member Piero Cipollone stated the European Central Financial institution (ECB) should speed up efforts to launch a digital euro in response to President Donald Trump’s push to advertise dollar-backed stablecoins globally, Reuters reported on Jan. 24.
Cipollone made the assertion whereas talking at a convention in Frankfurt, the place he additionally claimed that stablecoins pose a rising risk to conventional banking and financial methods.
Trump’s govt order, issued on Jan. 23, laid out a method to advertise the “growth and development of lawful and legit dollar-backed stablecoins worldwide.” Moreover, it prohibits federal businesses from advancing plans associated to a central financial institution digital foreign money (CBDC).
Cipollone stated:
“I assume the important thing phrase right here is worldwide. This resolution, you all know, additional disintermediates banks as they lose charges, they lose purchasers… That’s why we’d like a digital euro.”
Stablecoins are tokens backed by real-world belongings. This sector’s most important tokens by market cap are pegged to the US greenback.
Based mostly on Artemis knowledge, the entire stablecoin market cap has surpassed $211 billion, a 4.2% enhance over the previous 30 days. In the meantime, as of Jan. 24, the month-to-month transaction quantity for stablecoins was over $6 trillion.
Divergent paths
In response to the growth of the digital greenback, the ECB is experimenting with the idea of a digital euro — a central financial institution digital foreign money (CBDC) backed by the ECB and operated by personal establishments like banks.
Nevertheless, eurozone banks have opposed the proposal, fearing they may lose deposits to ECB-backed wallets. To mitigate this, the ECB has steered capping digital euro holdings at just a few thousand euros and guaranteeing they aren’t interest-bearing.
The ECB’s plans are contingent on European lawmakers passing enabling laws, after which a remaining choice will probably be made.
In response to the Atlantic Council, 11 international locations, together with Nigeria, Jamaica, and the Bahamas, have already launched digital currencies, whereas 44 others — together with China, Russia, and Brazil — are conducting pilot initiatives.
In response to a report printed in December, the ECB is about to start out creating its prototype for the digital euro this yr. Notably, the report emphasizes that the digital euro is a software that may guarantee the longer term competitiveness of the Eurozone’s monetary system.
