"Stablecoins threaten Europe's autonomy"/ ECB: Dollar's influence on cryptoassets increases geopolitical dependence on the US
The dollar's early dominance over stablecoins gives the US an advantage that could raise borrowing costs for Europe, reduce the autonomy of the European Central Bank and increase geopolitical dependence on the US, an ECB blog post argued.
Stablecoins, crypto assets pegged to the dollar, have gained popularity in recent years. They received a major boost earlier this month when US President Donald Trump signed a law to create a regulatory regime aimed at strengthening the dollar's status as the global reserve currency.
" Such dominance of the US dollar would provide the United States with strategic and economic advantages, allowing the country to finance its debt more cheaply while exerting global influence ," ECB sources said.
"For Europe, this means higher financing costs compared to the United States, reduced monetary policy autonomy and geopolitical dependence," the sources explained. According to them, if dollar-based stable currencies are widely used in the euro area for payments, savings or settlements, the ECB's control over monetary conditions could be weakened.
Dollar-pegged stablecoins, introduced by Tether and Circle, have dominated the global market, while the share of these euro-pegged assets remains small, with a market capitalization of less than 350 million euros.
Therefore, Europe must act quickly, creating a digital version of its currency, a project that is being hampered by legislative delays, and must also promote the creation of more stable currencies based on the euro.
“ The EU must also speed up payments and reduce cross-border costs. Finally, stronger global coordination on the regulation of stablecoins is essential,” the officials said. “If we abandon a common approach, we risk fueling instability, regulatory arbitrage and global dominance of the US dollar ,” they argued.
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