As stablecoins and private digital currencies gain traction globally, the European Central Bank (ECB) doubled down on its commitment to keep public money, both physical and digital, at the core of Europe’s financial system.
On Monday, ECB Executive Board member Piero Cipollone said in a blog post that euro banknotes and coins will continue to play a role in the financial ecosystem even if the central bank advances its digital euro plan.
“And rest assured: A digital euro will not replace banknotes and coins but rather complement them,” Cipollone said, adding that cash’s availability in both physical and electronic form will strengthen Europe’s payment autonomy.
The ECB’s statements came amid rapid growth in crypto payments and a shifting financial landscape where stablecoins are often used for cross-border payments and everyday purchases.
The ECB’s push for a digital euro
The ECB is developing a state-backed digital euro to serve as a regulated alternative to privately issued stablecoins.
On April 8, Cipollone said a digital euro would limit the potential of foreign currency stablecoins to be a common medium of exchange in Europe. He said failing to create a digital euro would lead to risks and deprive the bank of opportunities.
Despite the momentum behind the digital currency push, Cipollone reaffirmed that cash remains indispensable, particularly in times of crisis when digital infrastructure might not be accessible.
“Cash is here to stay,” he wrote. “As we move forward, euro area consumers will appreciate having banknotes, coins and digital euros in their wallets,” he added. “All with legal tender status, accessible anytime and anywhere, and tailored to diverse payment preferences and scenarios.”
An ECB study revealed in March that Europeans showed little interest in the digital euro.
On March 13, an ECB working paper showed that when asked to allocate 10,000 euros (about $10,800) on various assets, respondents only allocated a small portion to the digital euro, having little impact on traditional assets like cash.
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Europe risks stablecoin dominance without common rules
In a blog post on Thursday, ECB adviser Jürgen Schaaf called for global coordination in regulating stablecoins to combat US dollar dominance.
He said the European Union had a range of strategic options to address the rise of dollar stablecoins. It included regulated, euro-pegged stablecoins, distributed ledger technology (DLT) applications and the digital euro.
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