Dollar-Pegged Stablecoins Threaten EU Financial Stability

U.S. policy on stable assets and the global spread of dollar-pegged stablecoins pose a greater threat to Europe’s economy than trade tariffs, raising concerns about the EU’s financial stability and the euro’s sovereignty.

Italy’s Economy Minister Giancarlo Giorgetti expressed concern over U.S. policy on stablecoins, according to Reuters. Several other European officials echoed his worries.

Speaking at an asset management event in Milan, Giorgetti pointed out that dollar-pegged stablecoins like USDT and USDC are becoming increasingly popular for cross-border payments and investments, offering financial alternatives outside traditional banking systems. In his view, the growing popularity of these assets could negatively affect eurozone citizens and potentially undermine the euro’s status and Europe’s monetary sovereignty.

Giorgetti also warned that Donald Trump’s administration is planning to ease crypto regulations, which could amplify the negative impact of dollar stablecoins in Europe. He called on the European Union to take action to strengthen the euro’s role and develop a strategy to counter the fragmentation of Europe’s payment industry.

The Italian minister’s concerns align with those of Piero Cipollone, Member of the ECB’s Executive Board, who stated that an overreliance on stablecoins and international payment systems threatens Europe’s monetary sovereignty. He stressed that the only way to preserve Europe’s strategic autonomy is through the urgent issuance and adoption of the digital euro (CBDC).

The ECB is developing the digital euro for everyday payments and transfers, believing this CBDC will help preserve Europe’s monetary sovereignty. However, the initiative raised concerns among European banks and citizens alike.