Former ECB Official Calls for Euro Stablecoin Support to Retain Financial Influence
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Former ECB Official Calls for Euro Stablecoin Support to Retain Financial Influence

Lorenzo Bini Smaghi warns that Europe risks losing its financial power if it does not embrace euro-pegged stablecoins.

Key Highlights:

  • Lorenzo Bini Smaghi, a former board member of the European Central Bank (ECB), has raised concerns over Europe’s absence in the $255 billion stablecoin market, warning it could jeopardize the region’s position in global finance.
  • He advocates for the ECB to actively endorse euro-backed stablecoins and organize standardizations to enhance payment systems and unify capital markets.
  • Without such measures, Europe may have to confront its diminishing role in future financial landscapes.

Stablecoins are rapidly gaining traction, with the majority of the $255 billion market currently dominated by U.S. dollar-backed tokens, amounting to $241 billion according to RWA.xyz.

In an article in the Financial Times, Bini Smaghi emphasized that the EU has introduced regulations like the Markets in Crypto-Assets (MiCA), which compel token issuers to secure investments with cash and high-quality sovereign bonds. Despite this, the euro remains largely absent from the stablecoin arena due to hesitance from banks and policymakers…

Euro-backed Stablecoin

He warned that failure to act could lead to a significant shift in deposits from euro-area banks towards U.S.-linked platforms, ultimately undermining the ECB’s influence over monetary policies and market stability. He insists that regulators should support innovation rather than impede progress, stating that endorsements of euro-pegged tokens could modernize cross-border payments and unify European capital markets. If Europe chooses to remain passive, it will be accepting its marginalization in the global financial future.

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