Launching a digital euro won’t be sufficient to stop USD-backed stablecoins from becoming more and more dominant in the world’s cryptocurrency markets, according to a senior adviser to the European Central Bank (ECB). The remarks highlight how European institutions are growing increasingly concerned about the euro’s diminishing influence in the rapidly evolving landscape of digital finance.
Although a digital euro is a significant step, adviser Jürgen Schaaf and Director General for Market Infrastructure and Payments Ulrich Bindseil argued in a recent ECB blog post that it won’t immediately challenge the popularity of dollar-linked stablecoins like USDT and USDC, especially in the absence of additional measures and adoption incentives.
The Digital Grip of the Dollar
With more than 90% of the market, USD-backed stablecoins currently control the stablecoin landscape. The U.S. dollar has a significant edge in digital ecosystems because these tokens are widely used in cross-border payments, DeFi protocols, and cryptocurrency trading.
Even if the digital euro launches successfully, the ECB officials admitted that it may not take off unless European policymakers, payment companies, and cryptocurrency platforms aggressively support alternatives denominated in euros. They also mentioned how hard it is to dislodge USD stablecoins due to the network effects they already enjoy.
Their worries are in line with larger discussions in Europe about financial sovereignty, particularly as tokenized finance and stablecoins become more integrated into the global economy.
The Balancing Act of Europe
Officials are becoming more conscious of the importance of policy coordination, infrastructure readiness, and user adoption as the ECB gets ready to roll out the digital euro gradually by 2026. The market dynamics that currently favor the dollar may not change if a euro CBDC is simply released without further integration into DeFi, digital wallets, and trading platforms.
To guarantee that the euro stays relevant in the future of money, the blog advocates for private sector participation, regulatory clarity, and pan-European innovation.
Also read: What Does the US GENIUS Act Mean for Stablecoins?
