Authored by Helen Partz via CoinTelegraph.com,
The European Central Bank is sounding the alarm on the adoption of stablecoins, with a senior official advocating for the introduction of a digital euro to counter the influence of US dollar-pegged stablecoins in Europe.
ECB executive board member Piero Cipollone has penned another article expressing concerns about the rise of US dollar stablecoins and proposing the launch of a central bank digital currency (CBDC) to safeguard the eurozone’s monetary independence.
According to Cipollone, a potential digital euro “would limit the potential for foreign currency stablecoins to become a common medium of exchange within the euro area,” as stated in a publication on the ECB’s official site on April 8.
These comments come in the wake of a series of similar public declarations from Cipollone, who has been a vocal proponent of a digital euro as a strategic response to the dominance of dollar-backed stablecoins in Europe.
A “public-private partnership to retain sovereignty”
In his latest piece, Cipollone reiterated that overreliance on foreign providers, including stablecoins and international card networks, undermines Europe’s monetary sovereignty.
“It also underscores the urgent need for a digital euro. Failing to act would not only expose us to significant risks but also deprive us of a great opportunity,” the central banker emphasized.
ECB’s executive board member Piero Cipollone. Source: Bloomberg
Cipollone also voiced concerns about the United States’ growing acceptance of cryptocurrencies under the current administration, including initiatives to promote dollar-based stablecoins globally.
“They could potentially result not just in further losses of fees and data, but also in euro deposits being moved to the US and in a further strengthening of the role of the dollar in cross-border payments,” he said, adding:
“Faced with these challenges, we need a public-private partnership to retain our sovereignty. The digital euro — as a sovereign European means of payment based on EU legislation — would be the cornerstone of this partnership.”
ECB wants to promote cash but can’t do it online
Cipollone highlighted the importance of cash in ensuring financial inclusion and resilience, noting that cash remains a fundamental component of the European financial system and its sole sovereign payment method.
However, the shift towards digital payments has reduced cash usage amidst the rapid expansion of online shopping, which now represents one-third of retail transactions in Europe.
“Cash cannot be used online, and it is often not possible to pay using a European payment service, meaning we need to rely on non-European payment systems,” Cipollone added.
“The time to act is now,” he concluded. “Making progress on both the digital euro regulation and the regulation on the legal tender status of cash has become urgent if we are to increase our resilience to possible disruptions and reverse our ever-increasing dependence on foreign companies.”
Despite the ongoing efforts of the ECB, the proposed digital euro has faced criticism and skepticism among European consumers, particularly regarding data privacy concerns.
An ECB working paper on the digital euro released in March revealed that European consumers are hesitant to embrace a digital euro, with many expressing doubts about the potential benefits of a CBDC.
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