FRANKFURT (Reuters) – Euro zone banks want a digital euro to reply to U.S. President Donald Trump’s push to advertise stablecoins, a sort of cryptocurrency sometimes pegged to the U.S. greenback, European Central Financial institution board member Piero Cipollone mentioned on Friday.
Trump mentioned he would “promote the event and progress of lawful and legit dollar-backed stablecoins worldwide” as a part of a broader crypto technique that he sketched out in an government order issued on Thursday.
Cipollone mentioned this is able to assist lure much more prospects away from banks and strengthen the case for the ECB to launch its personal digital foreign money in response.
“I assume the important thing phrase right here (in Trump’s government order) is worldwide,” Cipollone advised a convention in Frankfurt. “This answer, you all know, additional disintermediates banks as they lose charges, they lose purchasers…That is why we’d like a digital euro.”
Stablecoins work equally to cash market funds in that they provide publicity to short-term rates of interest in an official foreign money – almost all the time the U.S. greenback.
A digital euro, in contrast, would primarily be an internet pockets assured by the ECB however operated by corporations similar to banks.
It might permit individuals, even those that do not have a checking account, to make funds. Holdings would doubtless be capped at a number of thousand euros and never remunerated.
Banks have expressed issues {that a} digital euro would empty their coffers as prospects switch a few of their money to the protection of an ECB-guaranteed pockets.
The euro zone’s central financial institution is at present experimenting with how a digital euro would work in observe. However it is going to solely make a remaining determination on whether or not to launch it as soon as European lawmakers approve laws on the matter.
Trump’s government order additionally prohibited the Federal Reserve from issuing its personal central financial institution digital foreign money (CBDC).
Nigeria, Jamaica and the Bahamas have already launched digital currencies and an extra 44 nations, together with Russia, China, Australia and Brazil are working pilots, in accordance with the Atlantic Council suppose tank.
(Reporting By Francesco Canepa; modifying by Mark Heinrich)
