FRANKFURT (Reuters) – Euro zone banks need a digital euro to meet U.S. President Donald Trump’s push to promote stablecoins, a type of cryptocurrency typically matched to the U.S. dollar, Piero Cipollone said on Friday .
Trump said he would “promote the development and growth of lawful and legitimate stablecoins throughout the world” as part of a broader crypto strategy he outlined in an executive order issued Thursday .
Cipollone said this would help lure even more customers away from banks and strengthen the case for the ECB to launch its own digital currency in response.
“I guess the key word here (in Trump’s executive order) is global,” Cipollone told a conference in Frankfurt. “This solution, you all know, further disintermediates the banks because they lose fees, they lose customers… that’s why we need a digital euro.”
Stablecoins operate similarly to money market funds in that they provide exposure to short-term interest rates in an official currency – almost always the US dollar.
A digital euro, on the other hand, would essentially be an online wallet guaranteed by the ECB but operated by companies such as banks.
This would allow people, even those who don’t have bank accounts, to make payments. The assets would probably be capped at a few thousand euros and not remunerated.
Banks have expressed concern that a digital euro will empty their coffers as customers transfer some of their money to the safety of an ECB-guaranteed wallet.
The eurozone’s central bank is currently testing how a digital euro works in practice. But that will only make a final decision on whether to launch it once European lawmakers approve legislation on the issue.
Trump’s executive order also prohibited the Federal Reserve from issuing its own Central Bank Digital Currency (CBDC).
Nigeria, Jamaica and the Bahamas have already launched digital currencies and 44 other countries, including Russia, China, Australia and Brazil, according to the Atlantic Council think tank.
(Reporting by Francesco Canepa; Editing by Mark Heinrich)
