YEREVAN (CoinChapter.com) — The European Stability Mechanism (ESM) has warned that the growing influence of US-backed stablecoins could threaten Europe’s financial stability and weaken the euro’s monetary sovereignty. The warning follows recent US regulatory changes that allow banks to offer stablecoin services without prior approval, increasing the US dollar’s dominance in global digital transactions.
The European Central Bank (ECB) has long expressed concerns that widespread use of dollar-backed stablecoins in Europe could reduce the euro’s role in the financial system. To counter this, the ECB is accelerating the digital euro project, aiming to maintain control over Europe’s monetary system.
EU Pushes for Faster Digital Euro Rollout
Pierre Gramegna, Managing Director of the ESM, emphasized the urgent need to speed up the digital euro launch. During a Eurogroup meeting, he warned that US tech firms could introduce mass payment systems based on US-backed stablecoins. As a result, the euro’s stability and financial sovereignty could face serious risks.
“It could eventually reignite foreign and US tech giant’s plans to launch mass payment solutions based on dollar-denominated stablecoins. And, if this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability,”
said Gramegna.
To address this, the ECB and European Commission are reviewing the Markets in Crypto-Assets (MiCA) directive to tighten stablecoin regulations and reduce reliance on US-backed digital assets.
US Stablecoin Expansion Fuels Eurozone Risks
The US government’s support for stablecoins is adding pressure on the European financial system. Federal Reserve Governor Christopher Waller recently stated that stablecoins could strengthen the US dollar’s role in the global economy.
Federal Reserve Chair Jerome Powell has also backed stablecoin regulations, allowing US banks to integrate stablecoins into their services. These developments could make US-backed stablecoins more dominant in international transactions.
In February, ECB official Piero Cipollone pointed out that US stablecoin adoption is forcing Europe to act quickly.
“The US and Europe have differing views on stablecoins. The Trump administration sees them as a tool to expand the US dollar’s global reach, whereas the ECB fears they could destabilize Europe’s financial system,”
Cipollone said.
US Banks Integrate Stablecoins, Impacting Eurozone
US banks are increasing their reliance on stablecoins, raising concerns among EU policymakers. Reports indicate that Bank of America (BoA) is considering launching its own stablecoin, further expanding the role of US digital assets.
Meanwhile, Circle CEO Jeremy Allaire is advocating for mandatory US registration of stablecoin issuers, ensuring stronger oversight of US-backed stablecoins in financial markets.
The ECB and European Commission warn that US-backed stablecoins could weaken the euro’s role in global finance. They argue that if stablecoins dominate digital payments, Europe’s financial influence may decline. To prevent this, the EU is accelerating the digital euro project. It is also tightening regulatory measures to keep control over its monetary system.
