ECB adviser doubts digital euro can match US dollar stablecoins

A central bank digital currency (CBDC) alone will not be enough to challenge the rise of US dollar-pegged stablecoins, according to an adviser to the European Central Bank (ECB).

In a blog post Monday on the ECB’s website, adviser Jürgen Schaaf outlined a range of strategic options for the European Union to address the rapid rise of dollar-based stablecoins.

Among those options were regulated euro-pegged stablecoins, distributed ledger technology (DLT) applications and the ongoing development of the digital euro.

He also emphasized the role of stronger global coordination on stablecoin regulation, highlighting stablecoin regulation disparities between the and the regulation.

Euro-based stablecoins as the first lever

“First, more support could be provided for properly regulated euro-denominated stablecoins,” Schaaf wrote, suggesting that stablecoins — rather than the digital euro — would be the EU’s primary response to the US stablecoin push.

“While the neutrality of public institutions is often preferred, a strategic blind spot in this space could prove costly,” Schaaf said, adding:

“Euro-based stablecoins, if designed to high standards and effective risk mitigation, could serve legitimate market needs. They could also reinforce the international role of the euro.”

Some studies previously highlighted the slow adoption rate of Europe-based stablecoins.

In May, Bank of Italy Governor Fabio Panetta, a former ECB official, said the despite frameworks like MiCA attempting to promote their use.

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Panetta also argued that the digital euro would be key to addressing the issue of the slow adoption of euro stablecoins.

ECB looks beyond digital euro

Schaaf, however, framed the digital euro as just one part of a larger digital payments strategy. He said the public CBDC, along with private innovation and DLT applications, can act as complementary pillars in safeguarding European monetary sovereignty.

“In point-of-interaction payments, the digital euro promises to be a robust line of defence of European monetary sovereignty,” he said.

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While not expanding on the digital euro, Schaaf focused on the use of as another option, saying that the technology offers improvements for domestic wholesale payments and cross-border payments.

In early July, the ECB two DLT pilot projects — Pontes and Appia — aimed at strengthening Europe’s wholesale and cross-border payment infrastructure.

EU to decide on the digital euro in 2025

The latest remarks by Schaaf bring fresh evidence that Europe is considering a multi-pronged approach to respond to the US stablecoin leadership rather than focusing on just one initiative, such as the digital euro.

Europe became concerned about US leadership in digital financial technology soon after US President Donald Trump by promoting stablecoins in January.

ECB officials have repeatedly approached the issue since, with board member Piero Cipollone arguing that the preserve the eurozone’s monetary sovereignty.

After to the “preparation phase” in November 2023, ECB officials have yet to decide on whether to move forward with its launch. to the ECB, the ECB Governing Council will decide whether to move on to the next phase of preparations by the end of 2025.

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