ECB Pushes for Digital Euro Led by Piero Cipollone to Counter Trump's Global Stablecoin Strategy

Jan 24, 2025, 02:14 PM

The European Central Bank (ECB) is advocating for the development of a digital euro in response to U.S. President Donald Trump's executive order promoting the use of dollar-backed stablecoins globally. ECB Executive Board member Piero Cipollone emphasized the necessity of a digital euro to counteract the potential loss of bank clients to stablecoins, which could further disintermediate banks. Trump's order, which prohibits the Federal Reserve from issuing a central bank digital currency (CBDC), aims to enhance the global reach of dollar-backed stablecoins. The ECB, led by Christine Lagarde, is currently experimenting with the implementation of a digital euro, which would function as an online wallet guaranteed by the ECB but managed by intermediaries like banks, allowing payments even for those without bank accounts. Holdings in the digital euro would likely be capped at a few thousand euros and not remunerated. However, European banks are concerned that a digital euro might lead to a reduction in their deposits as clients move funds to ECB-guaranteed wallets.