Euro stablecoins can reduce dollar reliance by anchoring payments in EUR
Europe’s growing use of dollar‑pegged stablecoins risks entrenching non‑euro settlement across digital rails. Euro‑denominated stablecoins could counter this by anchoring on‑chain payments, invoicing, and settlement directly in EUR. The result would be relative, not absolute, independence, keeping monetary transmission tied to the euro’s unit of account.
In practice, shifting settlement currency choice toward EUR can reduce FX leakage, limit dollarized liquidity loops, and support policy effectiveness. The approach depends on credible reserves, robust redemption, and bank and payment‑service‑provider connectivity. Without those, euro‑stablecoin usage may remain narrow and fragmented.
What Nagel proposed: euro stablecoins and a retail digital euro
As reported by crypto.news (https://crypto.news/german-central-bank-chief-sees-merit-in-euro-stablecoins-but-cbdc-remains-in-focus/), Germany’s central bank president Joachim Nagel endorsed euro‑denominated stablecoins and supported a retail digital euro (CBDC) to strengthen Europe’s payment independence. He framed both tools as complementary, aiming to reduce reliance on U.S. dollar stablecoins.
Before offering a direct remark, Nagel’s position has been summarized as pragmatic: viable euro‑pegged tokens could coexist with a CBDC to improve cost and reach. “Merit in euro‑denominated stablecoins,” said Joachim Nagel, president of the Deutsche Bundesbank. He has also been cited supporting a retail digital euro to bolster resilience and sovereignty in payments.
Near‑term impact: policy framing, MiCA compliance, and ecosystem integration
According to CoinDesk (https://www.coindesk.com/policy/2025/07/29/ecb-says-u-s-backed-stablecoin-use-in-eu-could-weaken-its-monetary-autonomy/), ECB advisers have warned that widespread use of U.S. dollar stablecoins in the EU could erode monetary autonomy and resemble partial dollarization. That framing elevates policy urgency while keeping the focus on safeguards and supervisory oversight. It also underlines that “independence” means control over rails and settlement currency, not isolation.
Under EU stablecoin rules, credible euro tokens are expected to maintain high‑quality reserves, offer redemption at par in euro, and provide transparent, frequent disclosures under competent supervision. Aligning governance, reporting, and redemption mechanics with these standards is central to trust. Interoperability with banks, PSPs, and card/acquirer networks will determine practical reach.
As noted by the German Banking Association (https://bankenverband.de/en/digitalisierung/digital-euro-not-answer-us-stablecoins/), a digital euro alone is unlikely to offset U.S. stablecoin influence; a broader mix, private euro stablecoins, tokenized money, and European innovation, will be required. That view implies near‑term priorities around liquidity pathways, merchant acceptance, and compliance tooling. Programmability and cross‑border usability may evolve in phases rather than arrive fully formed.
Risks of dollar stablecoins dominance and required EU guardrails
Key risks: dollarization, redemption shocks, weakened monetary autonomy
Based on a keynote summarized by the Deutsche Bundesbank (https://www.bundesbank.de/en/press/speeches/future-proofing-europe-s-financial-system-innovation-stability-and-sovereignty-988894), allowing dollar‑pegged stablecoins to dominate could deepen dependency and weaken the euro’s monetary transmission. If a redemption shock occurs at scale, liquidity strains and asset fire‑sales could magnify stress. These dynamics would complicate policy while shifting activity onto foreign‑currency rails.
Guardrails under MiCA: reserves, transparency, par redemption, oversight
Under the Markets in Crypto‑Assets (MiCA) regulation, EU guardrails center on fully reserved backing, transparent disclosures, enforceable redemption at par in euro, and continuous supervisory oversight. Properly implemented, these measures aim to limit run risk and operational fragility.
Independence here means settlement in euro on digital rails, not autarky. It is about anchoring pricing, flows, and redemption to EUR under EU oversight.
Timelines depend on legislative, supervisory, and industry readiness. No definitive launch date has been disclosed for the retail digital euro.
| DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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