Call for a Digital Euro

Philip Lane, the chief economist at the European Central Bank (ECB), emphasized the need for a digital euro to counter the influence of dollar-linked stablecoins and U.S. electronic payment systems in Europe.

Lane stated that the rise of Big Tech firms like Apple Pay, Google Pay, and PayPal in electronic payments poses risks of economic pressure and coercion. He spoke at University College Cork in Ireland.

He noted that a digital euro would offer a secure and universally accepted digital payment option governed by Europe, thereby reducing reliance on foreign providers. This would limit the penetration of foreign-currency stablecoins as a medium of exchange in the euro area.

Currently, 99% of the stablecoin market consists of tokens pegged to the U.S. dollar, increasing the risk that dollar stablecoins could dominate euro area payment systems, anchoring them to the dollar instead of the euro.

The ECB, along with other central banks globally, is considering introducing a Central Bank Digital Currency (CBDC) mainly to compete with stablecoins and corporate payment services. Lane highlighted that the necessity for a CBDC is particularly pressing for the ECB given the eurozone comprises multiple countries.

“The digital euro presents a unique opportunity to overcome the persistent fragmentation in retail payment systems across the euro area,” Lane added, underscoring the importance of a unified payment system across the 20 member states that use the euro.