The European Union has commenced active work on its digital euro project, considering global trends in cryptocurrencies and stablecoins. This initiative is a response to the recent passage of stablecoin legislation in the US.
Background for the Digital Euro
According to the Financial Times, the recent passage of the GENIUS Act in the US regarding stablecoins was one of the key factors prompting the EU to accelerate its actions towards the digital euro. The fast evolution of stablecoins is compelling the EU to avoid falling behind its competitors.
Discussion on Digital Euro Infrastructure
The European Central Bank (ECB) is considering developing the digital euro infrastructure on a public network rather than a private blockchain. Specifically, options for using public blockchains such as Ethereum and Solana are on the table for ensuring the operational aspect of the digital euro.
Global Implications and Competition in the Stablecoin Market
The absence of euro-backed stablecoins in the market, coupled with their small capitalization compared to dollar-backed stablecoins, underscores the importance of developing the digital euro for the EU. The rapid actions taken by the US in this area raise concerns about Europe potentially lagging behind other major economies in the digital currency race. Simultaneously, other global trading giants, such as China and Japan, are also taking steps towards legalizing stablecoins.
The creation of the digital euro is not just a financial move, but a strategic imperative for the EU amidst global competition in the digital currency market. Accelerated efforts on this project could strengthen Europe’s position in the digital economy.
