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EU Urged to Back Euro Stablecoins to Challenge Dollar Dominance
- ESM chief Pierre Gramegna urged the EU to promote euro-backed stablecoins to reduce reliance on USD tokens.
- EU leaders highlighted the delayed rollout of the digital euro and the need for domestic innovation in digital assets.
- Regulators warned of cross-border risks from foreign stablecoins, reinforcing MiCA’s tighter capital and liquidity rules.
Pierre Gramegna, managing director of the European Stability Mechanism (ESM), has urged the European Union to strengthen support for euro-denominated stablecoins to reduce dependence on US dollar-based tokens.
Speaking at a eurozone economic hearing, Gramegna said the EU should encourage domestic issuers to develop digital assets anchored to the euro. He emphasised that Europe “should not be dependent on US dollar-denominated stablecoins, which are currently dominating markets”.
In a rapidly evolving financial landscape, Europe should do its best to facilitate the generation of euro-denominated stablecoins by domestic issuers.
Pierre Gramegna, Managing Director, European Stability Mechanism Paschal Donohoe, president of the Eurogroup, echoed the need for innovation while noting that the digital euro, a proposed central bank digital currency, could benefit regional commerce. However, European Central Bank (ECB) board member Piero Cipollone stated that the digital euro is unlikely to launch before 2029, citing delays from EU lawmakers.
Related: Russia Sets Deadline for ‘Digital Ruble’ Rollout Despite Resistance to CBDC Payments
Systemic Concerns
Christine Lagarde, president of the ECB, previously warned that the bloc must address the risks of foreign stablecoins draining liquidity from the eurozone, reinforcing the importance of domestic alternatives.
These comments come as the ESRB, the EU’s systemic risk watchdog, called for an “urgent policy response” to manage vulnerabilities in cross-border stablecoin operations. The ESRB cautioned that multi-jurisdictional stablecoins issued inside and outside the EU pose regulatory challenges and that geopolitical uncertainty could test the financial system’s resilience.
The EU has already implemented stablecoin rules under its Markets in Crypto-Assets (MiCA) framework, requiring issuers to hold at least €350,000 (AU$617,000) in initial capital and maintain sufficient liquidity to meet redemption requests. Stablecoins exceeding €5 billion (AU$8.82 billion) in reserves or with over 10 million users face enhanced prudential and stress-testing requirements.
Globally, US policymakers continue to support dollar-denominated stablecoins as tools to reinforce the dollar’s dominance, a stance that underscores the competitive challenge facing the euro in the digital currency race.
Related: Tether Launches USAT Stablecoin Under New CEO Bo Hines
Author
Rachel Lourdesamy
Rachel is a freelance writer based in Sydney with experience within financial services, marketing, and corporate communications in the APAC region. An avid reader and a graduate of the University of Sydney, she covers topics including business, finance and human interest.
