Europe pushes digital euro to counter dollar stablecoins

Europe is tightening stablecoin rules and promoting a digital euro to reduce reliance on dollar-backed stablecoins and foreign payment networks, aiming to restore payment sovereignty.

European policymakers are intensifying efforts to reduce the dominance of dollar-backed stablecoins and foreign payment networks in the region’s financial system. Concerns are rising over Europe’s reliance on international card organizations, which handle over 60% of European card payments, and the absence of national card schemes in most Eurozone countries. To address these issues, the European Central Bank (ECB) is advocating for the introduction of a digital euro. The ECB argues that only a central bank digital currency can ensure the stability and trust needed for payment sovereignty and strategic autonomy. While some European banks are developing euro-denominated stablecoins to build alternative payment networks, ECB officials consider these private solutions insufficient compared to a digital euro. The EU has already imposed strict regulations on stablecoin issuers through the MiCA framework and is moving to further tighten rules, particularly targeting dollar-pegged stablecoins due to concerns about extraterritorial influence. These measures are also motivated by geopolitical risks, highlighted when Visa and Mastercard suspended services in Russia in 2022, exposing vulnerabilities in relying on foreign-controlled payment infrastructure.