ECB Pushes for Digital Euro in Response to Trump’s Stablecoin Push
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In a latest development, European Central Bank board member Piero Cipollone stated that euro zone banks need a digital euro to counter U.S. President Donald Trump’s promotion of stablecoins, which are typically pegged to the U.S. dollar.
Notably, Trump said he would promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide as part of a broader crypto strategy outlined in his executive order on Thursday.
As per a report from Reuters, Cipollone explained that Trump’s focus on promoting stablecoins worldwide could draw more customers away from traditional banks. He emphasized that this makes the case stronger for the European Central Bank (ECB) to launch its own digital currency, the digital euro, as a response to this growing trend.
“I guess the key word here (in Trump’s executive order) is worldwide,” Cipollone told a conference in Frankfurt. “This solution, you all know, further disintermediates banks as they lose fees, they lose clients…That’s why we need a digital euro,” he said.
Digital Euro May Impact Bank Funds
Banks are worried that a digital euro could lead customers to move their money into ECB-backed wallets, draining their funds. The European Central Bank is still testing how a digital euro would work, but a final decision on whether to launch it will be made once European lawmakers approve legislation on the matter.
Meanwhile, Trump’s executive order also blocks the Federal Reserve from issuing its own central bank digital currency (CBDC).
A Contrasting Approach
Discussions around banks accepting crypto payments and trading services are gaining momentum. Experts, including Circle CEO Jeremy Allaire, believe the Trump administration will facilitate partnerships between banks and crypto platforms, making crypto trading more accessible.
Donald Trump signed an executive order to establish a national digital asset stockpile, with the Presidential Working Group on Digital Asset Markets tasked with creating a regulatory framework for cryptocurrencies, including stablecoins.
Trump emphasized promoting dollar-backed stablecoins globally while opposing Central Bank Digital Currencies (CBDCs). Meanwhile, the European Central Bank (ECB) is exploring a digital euro, presenting a contrast to Trump’s approach.
