The European Central Bank has raised concerns about the rising use of stablecoins across Europe. It now warns that US dollar-backed digital currencies could threaten the euro’s role in everyday payments. In response, the ECB is moving forward with plans for a digital euro.
Today, consumers use digital payments rather than cash. Online shopping and mobile wallets have developed rapidly. Most of them, however, originate outside Europe. In 13 euro area countries, consumers use foreign providers exclusively to pay in shops.
Building Europe’s independent payment future
Even local cards rely on overseas networks. This puts Europe at risk. The ECB feels this dependence is undermining its control over its monetary system. The ECB views the digital euro as a remedy. It would provide a secure, home-designed payment choice for all citizens.
Compared to stablecoins, the euro would be regulated by EU law and uphold consumer privacy. It would be usable online and offline, even during periods of power or network disruptions. This would bring financial stability and independence, as stated by the ECB.
There remains a place for cash. It facilitates financial inclusion and serves as an emergency backup. The ECB remains committed to cash while planning for what’s to come. It will modernize banknotes and ensure cash is still in the system.
Shaping Europe’s digital future
Concurrently, the ECB is designing the digital euro. It aims to make sure consumers and companies benefit from the new currency. The digital euro should not replace private payment networks but make them expand beyond borders. It should also reduce fees levied by foreign card networks for European banks and shops.
The legal front is also advancing. Lawmakers are drafting the rules to regulate the digital euro. These rules will determine its operation and ensure that privacy is maintained. Early moves, according to the ECB, will keep Europe from becoming even more dependent on foreign instruments.
The digital euro is not merely an issue of payments. It is one of control, security, and innovation. In its absence, Europe risks losing out as other powers promote their solutions for payments. Now is the time to act, says the ECB. We have an objective in view: defend Europe’s currency, ensure its sovereignty, and build for a digital future.
