French Central Bank Criticizes Trump's Stablecoin Advocacy, Highlights Urgency for Digital Euro Implementation
Rewritten Article:
Europe's financial sovereignty could be under threat due to the U.S. pushing ahead with stablecoins, warns a top French central banker. Denis Beau, deputy governor of the Banque de France, has sounded the alarm over America's recent moves in the digital asset space, explaining that a strong focus on stablecoins could lead to significant consequences for Europe's monetary independence.
In a recent address, Beau expressed concerns about an executive order signed by President Trump in late January. The order prohibits progress on creating new central bank digital currencies (CBDCs), advocates for dollar-backed stablecoins, and encourages the public to use public blockchains. Beau argued that without a central bank-backed digital payment solution, private non-European alternatives could become dominant in tokenized finance.
"If the tokenization of financial assets were to gain momentum, the lack of a central bank money payment solution in euro might pose a threat to the role of central bank money as the anchor of the euro area's monetary architecture," Beau said.
With the potential for increased counterparty and liquidity risks, fragmented settlement systems, and eventual loss of sovereignty and financial stability, Beau believes Europe needs to take urgent action to preserve its monetary sovereignty.
The U.S. focus on stablecoins could lead to a shift in the dominance of currencies in digital transactions, potentially eroding the euro's role as a medium of exchange. The European Central Bank (ECB) has raised concerns about relying on foreign payment infrastructures, which could leave Europe exposed to external governance risks. Existing safeguards could prove insufficient in addressing the systemic risks posed by large-scale adoption of foreign stablecoins.
To counteract these risks, the ECB is advocating for a digital euro to serve as a "sovereign anchor" in Europe's payment ecosystem. Proponents believe a digital euro would help reduce dependence on foreign stablecoins, prevent data and fee leakage, and preserve autonomy in monetary policy implementation. Without a CBDC like the digital euro, Europe risks ceding control over transactional data and monetary intermediation to private foreign entities.
Additionally, a surge in stablecoin usage could destabilize eurozone banks if users convert deposits to dollar-linked assets, making it more difficult for banks to manage their liquidity. Geopolitically, a digital euro is seen as a tool to bolster the EU's standing against dollar-centric systems, particularly as the U.S. promotes its stablecoins.
In essence, U.S. stablecoin dominance could undermine the euro's transactional role, increase dependence on foreign systems, and weaken Europe's ability to enforce monetary policy—unless countered by a CBDC, such as the digital euro.
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- The deputy governor of the Banque de France, Denis Beau, has urged Europe to be wary of the increasing presence of U.S. stablecoins in the digital asset space, as they could jeopardize Europe's monetary independence.
- Beau's concerns stem from an executive order signed by President Trump, which discourages progress on central bank digital currencies (CBDCs) and promotes the use of dollar-backed stablecoins.
- Beau fears that without a central bank-backed digital payment solution, private non-European alternatives could become dominant in tokenized finance, leading to potential losses of sovereignty and financial stability.
- The European Central Bank (ECB) is advocating for a digital euro to serve as a "sovereign anchor" in Europe's payment ecosystem, reducing dependence on foreign stablecoins and preserving autonomy in monetary policy implementation.
- A digital euro could help prevent data and fee leakage, maintain control over transactional data, and bolster the EU's standing against dollar-centric systems, particularly as the U.S. continues to promote its stablecoins.
- The potential shift in digital transaction dominance could destabilize eurozone banks if users convert deposits to dollar-linked assets, making it more challenging for banks to manage their liquidity.
- Technology firms like Tron could take advantage of this uncertain regulatory landscape, as seen in their attempted acquisition of a digital-asset exchange in Italy. If European finance and technology do not adapt and promote their own solutions, they risk ceding control over their business and financial architecture to foreign entities.
