Digital euro plans to accelerate
The EU hopes to accelerate plans for a digital euro, according to the Financial Times, with public cryptocurrency blockchains, including Ethereum and Solana being discussed as the technical basis for the planned digital central bank currency.
This is because of concerns over the competitiveness of a European digital currency, as the US adopts stablecoin regulations. The Genius Act, passed by Donald Trump in July, stipulates that providers who hope to issue stablecoins pegged to the dollar must collateralise them at least 100% with cash, short-term American government bonds, or money market funds.
Stablecoins refers to tokens issued in a number of cryptocurrency networks being pegged 1:1 to an existing asset such as the US dollar, euro, or another cryptocurrency. Previously, they were used primarily in cryptocurrency trading as an equivalent to the US dollar. But they can also play a larger role in payment transactions in the long term, with one of the largest providers, Circle, operating a digital euro stable coin with a market capitalisation of approximately 100 million euros.
The quick adoption in US law has created an uncertainty among officials in the EU, the FT reports. They also fear that new American legislation would further boost an already upwards trend of dollar-tied tokens.
This is why they say a digital euro would be needed to ensure the dominance of the euro in Europe, saying that the plans for it need to be accelerated. The use of a public blockchain is also being discussed more seriously, though its use in the EU could see issues with data protection. Blockchain payments are publicly visible and users are only protected by the use of an anonymous address.
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