The European Central Bank (ECB) expects that United States President Donald Trump’s pledge to embrace cryptocurrencies pegged to the US dollar will accelerate legislative support for the digital euro, according to ECB board member Piero Cipollone.
The ECB has marketed its digital currency, which is simply an online wallet backed by the central bank, as an electronic payment method that does not rely on prominent US suppliers such as Visa and PayPal.
According to Cipollone, Donald Trump’s backing for globally available stablecoins tethered to the dollar would assist in building yet another America-made payment mechanism while also adding urgency to the digital euro effort.
The European Commission proposed digital euro legislation in June 2023, but little has moved since due to scepticism among some politicians and bankers.
“The political world is becoming more alert to this. And it’s possible that we will see an acceleration in the process,” Cipollone said in a recent interview.
Cipollone believed that the European Union (EU) Parliament and Council would complete work on the digital euro legislation by the summer, setting the stage for negotiations with the Commission.
This would allow time for the new rules to be finalised by November 2025, when ECB policymakers will vote on whether or not to launch the digital currency.
“Political processes are complex, and there are many things on the table. Obviously the sooner the better, but we fully understand their needs,” stated Cipollone.
When asked about the timing, EU politician Markus Ferber suggested Parliament may have a report ready by the summer. Stablecoins, like money market funds, provide exposure to short-term interest rates in an official currency while simultaneously serving as a payment mechanism.
Cipollone said the growth of US stablecoins as a means of payment was “worrisome” because it could drain deposits away from European banks.
“If people in Europe start to use stablecoins to pay, given that most of them are American and dollar-based, they will be transferring their deposits from Europe to the United States,” he told reporters.
Bankers fear that a digital euro will drain their coffers when clients shift some of their currency to an ECB-guaranteed wallet.
To address these concerns, the ECB stated that holdings would likely be limited to a few thousand euros and not remunerated.
Nigeria, Jamaica, and the Bahamas have already introduced central bank digital currency (CBDC), while 44 other nations, including Russia, China, Australia, and Brazil, are conducting pilots, according to the Atlantic Council think tank. In contrast, Donald Trump prevented the US Federal Reserve from creating its own CBDC.