.png)
3 hours ago
2
ARTICLE AD BOX
Pierre Gramegna, director of the European Stability Mechanism (ESM), stated on March 10 that Trump’s recent endorsement of cryptocurrencies could present financial difficulties for the European Union. The statement came during the Eurogroup press conference. Gramegna was particularly concerned about the U.S. promoting stablecoins.
“Policy developments in other jurisdictions”, said Paschal Donohoe, chairman of ministers, “can have important consequences for us here in Europe. These discussions are fundamentally linked to our own autonomy and to the resilience of our currency”.
Donohoe made these comments after the Eurogroup press conference. He added that the European Union needed to create a central bank currency to remain competitive with America.
The U.S., meanwhile, has created a Bitcoin reserve treasury and a stockpile of other digital assets, which Trump announced with an executive order and collected from seizures of Bitcoin over the years by many government agencies. European bankers have noticed this dramatic shift in Bitcoin policy and believe that America is integrating crypto into its financial system.
However, the European Central Bank (ECB) has remained sceptical about a Bitcoin reserve. Instead, the ECB has decided to focus on developing a digital Euro, starting work on the currency in 2021 but not finalising all the details and expecting a rollout in 2028.
The digital Euro would be a safe, government-backed currency designed as a stablecoin so Europeans could trade worldwide without exchanging their money with other currencies. A stablecoin would allow the European Central Bank (ECB) to maintain its currency without using an American dollar stablecoin or other cryptocurrencies. This would give the ECB more control over the monetary system and allow businesses to use blockchain design.
In February, the European National Bank (ENB) announced that a Central Bank Digital Currency (CBDC) would be used to process business transactions. The CBDC has been in development for some time but still seems to be a key focus of the ENB. At this stage, the use cases of a CBDC would include consumer payments, cross-border trade, and processing transactions between central banks.
Gramegna reasoned that the American government’s renewed interest in cryptocurrency may result in companies pushing dollar-backed stablecoins onto the European market, spreading American hegemony and even weakening the European economy.
“If this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability”, said Gramegna. “This digital euro is today more necessary than ever”.
For this reason, the ECB is determined to create a digital currency to maintain its strategic autonomy in light of recent developments in America. Under the Trump administration, American politicians have also commented on using a dollar-based stablecoin to spread American dominance globally.
On January 30, ECB president Christine Lagarde said that Bitcoin would not be used as a reserve currency because the technology was not liquid enough for a central bank. She also claimed that Bitcoin was lacking in security due to its design as a software project.
In October 2020, the European Central Bank published a report outlining the strengths and weaknesses of a central bank digital currency. Since then, the focus has been on developing feasibility studies. The ECB has collaborated with the public sector and private institutions, such as banks, to test the new currency through experiments and analysis.
In June 2023, the European Commission created a legal framework for the digital currency. The framework aimed to ensure that transactions were consistent across all European countries. This would allow the digital currency to mirror the pre-existing fiat currency, offering a smooth transition between the two currencies. However, the legal framework aimed to keep physical forms of money like cash and coins, providing an accessible currency for all Europeans, old and young, to use over all districts.
English (US)