European Union (EU) officials are accelerating plans for a digital euro, according to people involved in the discussions, after a new US stablecoin law deepened worries about the competitiveness of a European digital currency.
The US Congress last month passed a landmark law overseeing the $288 billion (€248 billion) stablecoin market, which is largely dominated by the dollar, after extensive lobbying by the crypto industry.
Stablecoins are a type of digital token pegged one-to-one to a sovereign currency and backed by reserves such as government bonds.
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A person involved in discussions said that since the so-called Genius Act was passed, EU officials had been “rethinking plans for the digital euro”.
People familiar with the matter added that officials were now considering running a digital euro on a public blockchain such as ethereum or solana rather than a private one, which had previously been expected, due to privacy concerns.
The quick passage of the US law “rattled a lot of people”, one person said, adding: “They’re saying, ‘Let’s speed up, let’s push’.”
The European Central Bank (ECB) has been working for several years on potentially creating a digital version of the euro, which would be free to use across the euro zone.
Supporters say such a digital currency would give people access to a form of payment backed by the central bank as cash usage declines, while promoting the euro globally.
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EU officials are now worried the new American legislation will spur the already growing use of dollar-denominated tokens and believe that a digital euro is needed to protect the single currency’s dominance across the continent.
“It’s starting to generate conversations that were not in place before the Genius Act,” one of the people said.
Piero Cipollone, a member of the ECB’s executive board, said in April that the US government’s promotion of dollar-backed stablecoins “raise[s] concerns for Europe’s financial stability and strategic autonomy”.
He added that it could result in “euro deposits being moved to the United States and in a further strengthening of the role of the dollar in cross-border payments”.
Crypto companies Circle and Tether are among those running dollar-pegged stablecoins, while US banks such as Citi and JPMorgan Chase are considering launching their own.
Central bank digital currencies are digital forms of public money. China is furthest ahead with its token, while the UK is considering creating a digital pound.
Several euro-denominated stablecoins have been launched, the largest of which is run by Circle and has a market capitalisation of $225 million. But the creation of a token by the ECB itself would cement the region’s commitment to digital assets.
“Europe cannot afford to rely excessively on foreign payment solutions,” Mr Cipollone said in April.
If the digital euro were run on a public blockchain, it could be traded anywhere, which could boost its circulation and use. But officials are wary about using existing blockchains because transactions are public, raising privacy concerns.
The use of a public blockchain was “definitely something that [EU officials are] taking more seriously now”, one of the people said.
Another person said a digital euro in its widely expected, private form would look “much more like what the Chinese central bank is doing than what private companies in the US are doing”, referring to the People’s Bank of China’s token, which is run privately.
The ECB said it was considering “different technologies — both centralised and decentralised — in the development of the digital euro, including distributed ledger technologies” and that a decision on the matter had not yet been taken. - Copyright The Financial Times Limited 2025
