Support for Euro-Denominated Stablecoins
In a recent address to the American Chamber of Commerce in Frankfurt, Joachim Nagel, president of Germany’s central bank, the Deutsche Bundesbank, expressed his endorsement for euro-denominated stablecoins. He posited that these digital currencies could provide a more cost-effective and efficient avenue for cross-border transactions, benefiting both businesses and consumers.
Digital Euro Initiatives
Nagel highlighted the European Union’s current initiatives aimed at creating a digital euro, which he described as the first unified retail digital payment solution designed exclusively on European infrastructure. However, he refrained from discussing potential regulations for euro stablecoins under the EU’s existing legal framework or how they would integrate with the forthcoming digital euro and the overall monetary policy.
Concerns Over US Dollar Dominance
In related comments made last week, Nagel raised concerns regarding the dominance of US dollar-based stablecoins, warning that a significant shift towards these could jeopardize the efficacy of European monetary policy and diminish the continent’s financial sovereignty.
Advocacy for State-Supported Digital Currency
Nagel has maintained a critical view of unbacked cryptocurrencies, preferring to advocate for a state-supported digital euro, which he believes could enhance Europe’s economic resilience. He revealed that the central bank has conducted thorough preliminary research on the potential launch of a wholesale central bank digital currency (CBDC), which would facilitate “programmable” payments in central bank money for financial institutions.
Growth of the Stablecoin Sector
Across the Atlantic, the stablecoin sector has witnessed substantial growth, driven by increasing demand for alternatives that mirror the value of the dollar, particularly following the passage of the GENIUS Act in July 2025 by former President Donald Trump. However, disagreements among crypto and banking stakeholders regarding crucial regulatory frameworks, particularly around issues like stablecoin yields and reward systems, have stalled legislative progress.
