"European sovereignty at risk" - EU responds to Trump with digital euro
The European Union's confrontation with the United States is not limited to trade or the future of Ukraine. Eurozone finance ministers have addressed another controversial issue: the role of cryptocurrencies. Concern is evident in Europe after the presentation in Washington of two bills aimed at liberalizing a growing market. The birth of a digital euro currency is becoming urgent.
"The cryptocurrency market is evolving politically and technologically very quickly," official sources explain. At stake is nothing less than the "strategic autonomy" of the European Union as well as "the strength of our currency." Essentially, the risk is "to see new transfers of savings from Europe to the United States, with a structural weakening of the euro," they said.
Even before his return to the White House, President Donald Trump had floated the idea of promoting cryptocurrencies. European authorities had already expressed concern at that time. Two bills have been introduced in recent weeks, both of which deal with so-called stablecoins, i.e. cryptocurrencies backed by the dollar or another currency.
The principle of a stablecoin is simple: the issuer must be able to repay the investment at any time. The STABLE Act has stricter rules regarding reserve requirements, but allows the use of a variety of instruments to repay the investment: security deposits, short-term government bonds, repurchase agreements and even bank reserves. The GENIUS Act allows issuing companies to use money market instruments for repayment.
The legislative proposals are generally quite loose and pose the risk of incompatibility with the European rules of the Crypto-Asset Market Regulation, which entered into force in 2023. There are two main differences with the European regulatory framework: on the one hand, the American proposals provide for remuneration; on the other, they allow issuing companies to deposit money in Federal Reserve accounts. The risks, in the eyes of the European authorities, are not lacking.
There is a risk of witnessing a change in the very nature of currencies. They would no longer be simply a speculative instrument, as they currently are, but would also become a savings instrument, and even an alternative form of payment to traditional currencies, given the possible involvement of the American Central Bank. From this latter perspective, the European Union is proving to be particularly fragile.
The financial market in Europe remains fragmented, despite a single currency and the free movement of capital. American companies have been masters at taking advantage of this, offering pan-European solutions first in credit cards (Visa and Mastercard), then in new payment systems (Apple Pay and Google Pay). Today they are ready to do the same with cryptocurrencies.
The director of the European Stability Mechanism explained that “European sovereignty and financial stability” are at risk. Moreover, these currencies are a problem for European banks. Credit institutions would be bypassed by cryptocurrency transactions that would be carried out behind their backs. They would not be able to monitor the creditworthiness of their customers, as they do now with payment cards. Not in vain, the leaders of the eurozone reiterated their desire to accelerate the path to the digital euro.
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