Following US President Donald Trump’s executive order promoting dollar-backed stablecoins, the European Central Bank has stressed the urgency for a digital euro to ensure that eurozone banks remain competitive.
ECB board member Piero Cipollone conveyed concerns to Reuters that this initiative may pull customers away from European banks, emphasizing the need for the ECB to develop its own digital currency.
The executive order issued by President Trump promotes the growth and development of legitimate dollar-backed stablecoins globally, positioning the US as a leader in the cryptocurrency space.
This has raised concerns for European banks, as stablecoins, which are cryptocurrencies pegged to the US dollar, may entice clients seeking alternatives to traditional banking services.
Stablecoins operate similarly to money market funds by providing exposure to short-term interest rates in official currencies, with the majority pegged to the US dollar.
