Experts from the European Central Bank (ECB) are expressing concerns about the dominance of dollar stablecoins, which may undermine Europe's monetary policy and increase borrowing costs.
Dominance of Dollar Stablecoins
Dollar stablecoins such as Tether's USDT and Circle's USDC occupy a leading position in the global market, while euro-denominated versions hold less than 350 million euros in capitalization. ECB adviser Jürgen Schaaf's blog highlights that this dominance may fundamentally alter the balance of global monetary power.
Trump Administration's Strategy
Recent legislation signed by President Trump creates a regulatory framework that supports the dollar's status as a global reserve currency in the stablecoin space. This represents a modern evolution of traditional monetary diplomacy, providing U.S. stablecoin issuers with competitive advantages in international markets.
ECB's Response Strategy
Schaaf recommends accelerating the development of a digital euro and fostering support for euro-denominated stablecoins to enhance their competitiveness. It should noted that the current regulatory uncertainty does not promote stablecoin development in Europe, potentially opening up opportunities to improve cross-border payments using distributed ledger technology.
Jürgen Schaaf's analysis underscores growing concerns about dollar stablecoin dominance threatening European monetary autonomy. With new regulatory frameworks adopted in the U.S., Europe needs to intensify efforts to create alternative stablecoins.
