Deutsche Bundesbank Chief Advocates for Euro-Based Stablecoins and Digital Currency in Europe
Deutsche Bundesbank's Joachim Nagel highlighted how stablecoins pegged to the euro could provide greater autonomy from dollar-backed digital currencies set to gain regulatory approval under the GENIUS Act.
The president of Germany's central banking institution, the Deutsche Bundesbank, Joachim Nagel, has expressed his backing for implementing both a euro-backed central bank digital currency (CBDC) and stablecoins denominated in euros to facilitate payment transactions.
During a prepared address delivered at the American Chamber of Commerce's New Year's Reception in Frankfurt on Monday, Nagel stated that European Union authorities are putting in substantial effort to launch a retail CBDC. The central bank leader further indicated that stablecoins denominated in the euro currency have the potential to play a role in "making Europe more independent in terms of payment systems and solutions."
Notably, a wholesale CBDC would allow financial institutions to make programmable payments in central bank money. I also see merit in euro-denominated stablecoins, as they can be used for cross-border payments by individuals and firms at low cost.
Joachim Nagel
The timing of Nagel's statements follows several months after US President Donald Trump enacted legislation that creates a regulatory framework for payment stablecoins within the United States, which could position stablecoins pegged to the US dollar to compete against any future launch of a euro-backed alternative. Full implementation of the law is anticipated to occur 18 months following its signing or 120 days after associated regulations receive final approval.
The Deutsche Bundesbank president's commentary regarding stablecoins notably omitted the potential dangers he had referenced during the previous week at the Euro50 Group gathering. At that event, Nagel had cautioned that domestic monetary policy "could be severely impaired, not to mention that European sovereignty could be weakened" in scenarios where stablecoins denominated in US dollars achieve substantially greater market penetration compared to euro-pegged alternatives.
Stablecoin yield at issue in US bill under consideration
Lawmakers in Washington alongside officials from the White House have been conducting meetings with industry representatives from both the banking sector and cryptocurrency space in preparation for a possible Senate vote on the CLARITY Act. This legislative proposal, which aims to establish a thorough regulatory framework governing digital assets, has generated division among leaders in the crypto industry and banking sectors based on its treatment of stablecoin rewards, a provision that remains under development in the pending legislation.