ECB board member Piero Cipollone mentioned the European Central Financial institution (ECB) should speed up efforts to launch a digital euro in response to President Donald Trump’s push to advertise dollar-backed stablecoins globally, Reuters reported on Jan. 24.
Cipollone made the assertion whereas talking at a convention in Frankfurt, the place he additionally claimed that stablecoins pose a rising risk to conventional banking and financial programs.
Trump’s government order, issued on Jan. 23, laid out a technique to advertise the “improvement and progress of lawful and bonafide dollar-backed stablecoins worldwide.” Moreover, it prohibits federal companies from advancing plans associated to a central financial institution digital forex (CBDC).
Cipollone mentioned:
“I assume the important thing phrase right here is worldwide. This answer, you all know, additional disintermediates banks as they lose charges, they lose shoppers… That’s why we’d like a digital euro.”
Stablecoins are tokens backed by real-world belongings. This sector’s most vital tokens by market cap are pegged to the US greenback.
Based mostly on Artemis knowledge, the whole stablecoin market cap has surpassed $211 billion, a 4.2% enhance over the previous 30 days. In the meantime, as of Jan. 24, the month-to-month transaction quantity for stablecoins was over $6 trillion.
Divergent paths
In response to the growth of the digital greenback, the ECB is experimenting with the idea of a digital euro — a central financial institution digital forex (CBDC) backed by the ECB and operated by personal establishments like banks.
Nevertheless, eurozone banks have opposed the proposal, fearing they may lose deposits to ECB-backed wallets. To mitigate this, the ECB has recommended capping digital euro holdings at a couple of thousand euros and making certain they don’t seem to be interest-bearing.
The ECB’s plans are contingent on European lawmakers passing enabling laws, after which a closing resolution will probably be made.
In line with the Atlantic Council, 11 international locations, together with Nigeria, Jamaica, and the Bahamas, have already launched digital currencies, whereas 44 others — together with China, Russia, and Brazil — are conducting pilot initiatives.
In line with a report revealed in December, the ECB is about to start out creating its prototype for the digital euro this yr. Notably, the report emphasizes that the digital euro is a device that may guarantee the long run competitiveness of the Eurozone’s monetary system.