The European Union is working intensively on developing a digital euro in response to the dollar's dominance in the crypto market following a new law in the United States.
EU's Response to US Stablecoin Law
Following the passage of the GENIUS Act, which brings legal clarity around stablecoins, EU officials began re-evaluating their strategies for creating a digital euro. The legislation sparked concerns among European officials, and one remarked that the fast approval "rattled a lot of people," prompting a desire to accelerate the process.
Exploring Public Blockchains for Digital Euro
Previously, the EU had considered creating a digital euro on a private centralized platform similar to China's approach. However, it is now weighing the possibility of utilizing public blockchains like Ethereum and Solana to ensure global accessibility of the digital euro amid growing pressure on its value.
Risks to Euro Amid Dollar Dominance
According to European Central Bank officials, dollar dominance in the financial system could pose a threat to the euro's position. Piero Cipollone, a member of the ECB's executive board, warned that initiatives around dollar-backed stablecoins could lead to "euro deposits being moved to the United States," increasing the dollar's role in international payments.
The development of the digital euro continues to evolve, shifting from initial ideas to exploring various alternatives including public blockchains as a response to the growing influence of the dollar on the global stage.
