European Union policymakers have been considering the launch of the digital euro on public blockchains as they further their work on the CBDC.
According to individuals involved in the discussions cited by the Financial Times, EU representatives are currently fast-tracking plans for a digital euro, following the recent passage of the Genius Act in the US and uncertainties that it could lead to dollar-backed stablecoins dominating cross-border payments. Stablecoins are a type of digital token pegged one-to-one to a sovereign currency and backed by reserves like government bonds.
The same sources mention that since the Genius Act was passed, EU policymakers had been rethinking their plans for the digital euro. Officials were taking into account running a digital euro on a public blockchain such as Ethereum or Solana instead of a private one. This has previously been expected, mostly based on privacy concerns. According to an individual involved in the discussions, the accelerated passage of the US law placed officials in a hurry, with them pushing for a sped-up process.
Stablecoin adoption across the EU
The European Central Bank has been focusing on developing a digital version of the euro for several years now, with the regulator aiming to allow the free use of it across the Eurozone. Supporters view the move as an opportunity to offer people access to a form of payment backed by the central bank as cash usage drops, while also promoting the euro at a global level.
Furthermore, European Union policymakers are also concerned that the Genius Act will increase the use of dollar-denominated tokens and think that a digital euro is needed to safeguard the currency’s governance across the continent. Prior to this, several euro-denominated stablecoins have been rolled out, with the largest of them being run by Circle. However, if the European Central Bank develops a token, it would solidify the EU’s commitment to advancing digital assets. As detailed by the central bank’s officials, the regulator was considering different technologies, both centralised and decentralised, in the creation of the digital euro, including distributed ledger technology. Yet, a decision on the matter had not been taken.
