The United States’s rising backing of cryptocurrencies—especially dollar-pegging stablecoins—is making European financial authorities more and more cautious. Managing Director of the European Stability Mechanism (ESM), Pierre Gramegna, claims that changes in U.S. policies might seriously compromise Europe’s financial autonomy.
Gramegna voiced worries about the possible spread of U.S. dollar-backed digital payment systems during a recent Eurogroup news conference. He warned that the effective implementation of these stablecoin-based payment systems by big American and foreign internet corporations could potentially undermine the monetary sovereignty of the eurozone. “If these projects become popular, they could upset financial equilibrium all around Europe,” he said.
The ESM has strengthened its support for the initiatives of the European Central Bank (ECB) aiming at hastening the introduction of a digital euro. Gramegna underlined the need for this project: “Now more than ever, Europe must establish its own digital currency to maintain strategic financial independence.”
Campaign for a Digital Euro.
Recent events in America have intensified the push for a European digital currency. Stressing that financial measures overseas could have far-reaching effects for Europe, Irish Finance Minister Paschal Donohoe reflected Gramegna’s views. “These choices are tightly related to the resilience of our money and economic sovereignty,” Donohoe said.
Since 2020, the ECB has been exploring digital currencies, focusing on both institutional and consumer-facing payment options. Aiming to upgrade Europe’s financial infrastructure, it revealed intentions in February to increase the CBDC-based transaction system.
Divergent Policies: America Against Europe
Europe is fast implementing its digital euro plans; the United States has adopted a different position. Former President Donald Trump has publicly rejected central bank digital currency (CBDC) issued by the Federal Reserve. He signed an executive order prohibiting the creation and dissemination of a U.S. CBDC earlier this year and formed a task force to monitor digital assets.
The ECB, meanwhile, is adamant about its determination to keep Bitcoin and other cryptocurrencies off central bank reserves. Declaring in a recent speech that reserves must remain “liquid, safe, and secure,” ECB President Christine Lagarde ruled out including digital assets.
European policymakers are intensifying their efforts to strengthen the monetary framework of the area as the global financial scene changes. Their goal in advocating the acceptance of a digital euro is to offset the growing impact of dollar-backed stablecoins and preserve European financial stability.
