The European Union is intensifying its efforts to introduce a digital euro, following the United States’ recent passage of a groundbreaking law regulating stablecoins — digital tokens tied to real-world currencies, such as the US dollar.
According to the Financial Times, people involved in the talks believe that the swift approval of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act has triggered urgency among EU officials, who fear falling behind in the fast-moving race to develop central bank digital currencies (CBDCs).
The American law has reinforced the dominance of dollar-backed stablecoins, which currently make up 99% of the global stablecoin market prompting European policymakers to take a harder look at the future of the euro in a digital world.
Public Blockchain Now on the Table
One of the biggest shifts in the EU’s approach is a growing openness to running the digital euro on a public blockchain — such as Ethereum or Solana — rather than on a private, centralised system. Privacy concerns and the global reach of public networks are driving this reconsideration, according to sources close to the discussions.
The European Central Bank (ECB) has been researching a digital euro for years, but the US’s aggressive stance is now changing the tone in Brussels. “It rattled a lot of people,” one official said. “They’re saying, ‘Let’s speed up, let’s push.’”
ECB board member Piero Cipollone warned in April that the growing popularity of dollar-based stablecoins could pose risks to Europe’s financial independence, potentially leading to euro deposits being shifted abroad.
While private companies like Circle and Tether already offer euro-pegged tokens, their reach is small. As per the CoinMarketCap data, Circle’s euro-backed stablecoin, EURC, has a market capitalization of just $225 million, a fraction of the $288 billion global stablecoin market. A digital euro issued by the ECB would solidify the EU’s presence in the digital asset space and protect the euro’s role globally.
The ECB says it’s still weighing both centralised and decentralised technologies and hasn’t yet decided on the final structure for the digital euro.
