ECB Seeks Faster Digital Euro Legislation Amid US Stablecoin Push

The European Central Bank (ECB) is hoping that U.S. President Donald Trump’s endorsement of dollar-pegged cryptocurrencies will spur progress on legislative approval for the digital euro, ECB board member Piero Cipollone told Reuters.

The ECB has been developing its own digital currency, envisioned as an online wallet backed by the central bank, with the goal of providing an alternative electronic payment method that is not dependent on major U.S. financial providers such as Visa and PayPal. According to Reuters, Cipollone noted that Trump’s support for widely accessible stablecoins tied to the U.S. dollar introduces yet another American-driven financial tool, further increasing the urgency to move forward with the digital euro.

The European Commission put forward digital euro legislation in June 2023, but progress has been sluggish, with skepticism from some lawmakers and financial institutions slowing the process. Per Reuters, Cipollone highlighted growing political awareness of the matter, suggesting that the pace of legislative work might soon pick up.

“The political world is becoming more alert to this,” Cipollone said in an interview with Reuters on Wednesday. “And it’s possible that we will see an acceleration in the process.”

Related: European Commission Investigates Crypto Rules for Cross-Border Stablecoins

Cipollone expressed hope that the European Parliament and Council would complete their review of the digital euro legislation before the summer, allowing negotiations with the Commission to commence. Should this timeline hold, new regulations could be finalized by November, aligning with the ECB’s planned vote on whether to proceed with launching the digital currency.

According to Reuters, EU lawmaker Markus Ferber acknowledged this timeline but noted that Parliament might, at best, have a report ready by the summer, suggesting that further delays remain possible.

Stablecoins, which are backed by traditional currencies and offer exposure to short-term interest rates, are increasingly being used for payments. Cipollone warned that the rising prevalence of U.S.-issued stablecoins in European transactions could pose a risk by shifting deposits away from European banks to U.S. financial institutions.

“If people in Europe start to use stablecoins to pay, given that most of them are American and dollar-based, they will be transferring their deposits from Europe to the United States,” Cipollone told Reuters.

European banks have also voiced concerns over the digital euro itself, fearing that its introduction could lead customers to move portions of their funds into ECB-backed wallets, thereby reducing their own deposit bases.