The decision makers of the European Union are discussing to increase efforts to introduce a digital euro when the US’s new stablecoin law intensifies the pressure on the block to keep the pace of the rapidly moving world of digital money, reported the Financial Times,
The US Congress last month approved the Genius Act, a framework for the $ 288 billion stablecoin sector dominated by dollar-pegged tokens like Tether’s USDT and Circle Internet’s (CRCL) USDC. The move caught many in Europe outside the guard, according to people who know the negotiations, and triggered concern that the dollar-pointed tokens could tighten America’s grip on cross-border payments if the EU does not speed up its own plans.
In a remarkable shift, officials now weigh whether to launch the central bank’s digital currency (CBDC) On public blockchains such as Ethereum or Solana rather than the private infrastructure previously imagined.
Until recently the European Central Bank (ECB) had leaned on a private, centrally controlled system with reference to privacy and security. But sources say that US legislation has moved the conversation, with some politicians who are now open to decentralized networks that can help the euro circulate more freely and compete with dollar -based digital assets globally, according to FT.
The ECB has been studying a digital euro for several years and threw it as a public alternative to privately issued payment systems as cash use decreases. Still, the US Momentum raises concerns that euro deposits could increasingly flow into dollar-denomined assets abroad.
With China, piloting its digital yuan and the United Kingdom, considering a digital pound, Europe faces a mounting pressure to deliver. A handful of euro-backed stableecoins already exist, Circle’s EURC among them, but a central bank-issuing token would carry much more weight.
The ECB confirmed to the Financial Times that it still assesses both centralized and decentralized technologies, leaving the possibility of a blockchain-driven euro as officials run to protect the individual currency’s relevance in a digitization world.
Read more: ECB says US-stacked stableecoin use in the EU could weaken its monetary autonomy
