European Union policymakers are discussing ramping up efforts to introduce a digital euro as the U.S.’ new stablecoin law intensifies pressure on the bloc to keep up the pace in the fast-moving world of digital money, the Financial Times reported,
The U.S. Congress last month approved the GENIUS Act, a framework for the $288 billion stablecoin sector dominated by dollar-pegged tokens like Tether’s USDT and Circle Internet’s (CRCL) USDC. The move caught many in Europe off guard, according to people familiar with the talks, and sparked concerns that dollar-pegged tokens could tighten America’s grip on cross-border payments if the EU doesn’t accelerate its own plans.
In a notable shift, officials are now weighing whether to launch the central bank digital currency (CBDC) on public blockchains like Ethereum or Solana rather than the private infrastructure previously envisioned.
Until recently, the European Central Bank (ECB) had been leaning toward a private, centrally controlled system, citing privacy and security. But sources say the U.S. legislation has shifted the conversation, with some policymakers now open to decentralized networks that could help the euro circulate more freely and compete with dollar-based digital assets globally, according to the FT.
The ECB has been studying a digital euro for several years, pitching it as a public alternative to privately issued payment systems as cash use dwindles. Yet U.S. momentum is raising concerns that euro deposits could increasingly flow into dollar-denominated assets abroad.
With China piloting its digital yuan and the U.K. considering a digital pound, Europe faces mounting pressure to deliver. A handful of euro-backed stablecoins already exist, Circle’s EURC among them, but a central bank-issued token would carry far more weight.
The ECB confirmed to the Financial Times it is still evaluating both centralized and decentralized technologies, leaving open the possibility of a blockchain-powered euro as officials race to protect the single currency’s relevance in a digitizing world.
Read more: ECB Says U.S.-Backed Stablecoin Use in EU Could Weaken Its Monetary Autonomy