Bundesbank President Wants Euro-Pegged Stablecoins to Prevent Dollarization
European Central Bank Governing Council member Joachim Nagel advocates for euro-pegged stablecoins to support low-cost cross-border payments and counter the risk of “dollarization” from USD-pegged stablecoins, which could undermine European monetary sovereignty. Nagel suggests that adopting euro-based stablecoins and exploring wholesale central bank digital currencies (CBDCs) would help maintain effective monetary policy and leverage digital technologies amid geopolitical uncertainty. The Eurosystem is considering distributed ledger technologies for tokenized deposits and stablecoins, while also developing a digital euro, targeted for launch in 2029. Critics note that in Europe, confidence in the euro reduces the threat of dollarization seen in developing countries, but warn that stablecoins may facilitate illicit activity and could violate the principle of currency singleness. Some experts suggest Europe’s best strategy is to prioritize tokenized deposits over stablecoins, viewing the former as less risky. Others argue stablecoins are complementary to the current system and not a threat, especially given the euro’s stability and the dollar’s established role in cross-border trade and finance.
