European Central Bank (ECB) exec renews push for digital euro to counter US stablecoin growth
Cash is the “cornerstone of the European financial system” and the only sovereign form of payment, but it cannot be used online, according to Piero Cipollone of the European Central Bank.
The European Central Bank is increasing its warnings about stablecoin adoption, with one of its top officials advocating for a digital euro to limit the spread of US dollar-pegged stablecoins across the continent.
Piero Cipollone, an ECB executive board member, has written another post raising worries about the growing popularity of US dollar stablecoins, claiming that establishing a central bank digital currency (CBDC) may assist safeguard the eurozone’s monetary sovereignty.
A hypothetical digital euro “would limit the potential for foreign currency stablecoins to become a common medium of exchange within the euro area,” Cipollone said in a statement posted on the ECB’s official website on April 8.
A “public-private partnership to retain sovereignty”
In his most recent post, Cipollone emphasised that Europe’s monetary sovereignty is jeopardised by an overreliance on foreign providers, such as stablecoins and international card networks.
“It also highlights the urgent necessity for a digital euro. Failure to act would not only expose us to severe risks, but would also lose us of a valuable opportunity,” the central banker stated.
Cipollone also expressed concern about the current administration’s increasingly crypto-friendly approach, including efforts to promote dollar-based stablecoins around the world. “They could result in further losses of fees and data, as well as euro deposits being moved to the US and strengthening the role of the dollar in cross-border payments,” he said. He emphasised the need for a public-private partnership to maintain sovereignty. The digital euro, as a sovereign European payment system based on EU regulation, would form the foundation of this cooperation.
ECB wants to promote cash but can’t do it online
Cipollone also emphasised the “vital role of cash” in achieving financial inclusion and resilience, claiming that cash is still a “cornerstone of the European financial system” and the only sovereign method of payment.
However, a growing preference for digital payments has constrained the usage of cash as online shopping has grown rapidly, accounting for one-third of European retail transactions, he said.
“Cash cannot be used online, and it is often not possible to pay using a European payment service, meaning we need to rely on non-European payment systems,” according to Cipollone.
“The time to act is now,” he remarked. “Making progress on both the digital euro regulation and the regulation on the legal tender status of cash has become urgent if we are to increase our resilience to possible disruptions and reverse our ever-increasing dependence on foreign companies.”
Despite the ECB’s continuous efforts, European consumers have expressed criticism and scepticism about the projected digital euro, particularly over data privacy issues.
An ECB working paper on the digital euro released in March found that European consumers are uninterested in adopting a digital euro, with many seeing little value in the prospective CBDC.
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