The European Union is ramping up efforts to develop euro-backed stablecoins as part of a broader strategy to reduce dependence on the U.S. dollar in digital finance. European officials argue that this move is not only a matter of financial innovation but a geopolitical necessity in the global digital economy.
During a recent hearing on the economic outlook of the eurozone, Pierre Gramegna, Managing Director of the European Stability Mechanism (ESM), emphasized the importance of creating euro-denominated stablecoins to challenge the dollar’s supremacy in global markets. He noted that Europe must avoid becoming dependent on U.S.-pegged tokens, which dominate the digital asset landscape following new pro-crypto regulations in the United States.
According to Gramegna, “Europe should not depend on stablecoins denominated in U.S. dollars that currently dominate the markets.” He added that the continent must embrace financial innovations such as tokenized assets and stablecoins, asserting that these technologies are becoming an essential part of the financial system’s future. He urged European institutions to support local issuers in creating euro-backed stablecoins as a foundation for the region’s digital economy.
Eurogroup President Paschal Donohoe echoed this sentiment, highlighting that the digital euro (CBDC) could also play a vital role in enhancing European commerce. The European Central Bank (ECB) first introduced the idea of a digital euro in early 2023, but progress has been slow due to regulatory hurdles. Despite optimism, ECB Executive Board member Piero Cipollone confirmed that the digital euro is unlikely to launch before 2029, citing delays from European lawmakers.
The urgency for European action comes after the United States introduced the GENIUS regulatory package in 2025, which legitimized the circulation of U.S. dollar-backed stablecoins, leading to a surge in their adoption. In response, Brussels shifted its stance from skepticism to strategic acceptance of stablecoins as a geoeconomic tool. European policymakers now recognize that failing to establish a euro-based digital alternative could leave the region financially dependent on U.S.-controlled infrastructures.
In an encouraging development, a consortium of nine major European banks is reportedly preparing to launch a euro-pegged stablecoin in compliance with the MiCA (Markets in Crypto-Assets) regulation by late 2026. This initiative aligns with the EU’s broader agenda to strengthen digital sovereignty and ensure that the European financial ecosystem remains competitive in the global digital economy.
Still, the road ahead remains challenging. Public enthusiasm for digital currencies remains low — an ECB survey found that only a small fraction of 19,000 respondents across 11 eurozone countries were willing to invest in a CBDC. Meanwhile, ECB President Christine Lagarde continues to warn about the risks posed by foreign stablecoins, urging policymakers to close regulatory loopholes to prevent liquidity outflows from the eurozone.
Conclusion:
The European Union’s new push for euro-denominated stablecoins marks a significant strategic shift from caution to innovation. By fostering local digital assets, Europe aims to assert financial independence, strengthen its global influence, and prepare for a decentralized future — one where digital sovereignty is as crucial as monetary stability.
