Key Takeaways:
- U.S.-backed stablecoins offer European citizens an appealing method for cross-border transactions.
- The minister expressed concern that the widespread use of these stablecoins could undermine the international role of the euro.
- The European Central Bank is advancing the digital euro project, which seeks to consolidate European payment systems.
According to a Reuters report on Tuesday, Italy’s Economy Minister, Giancarlo Giorgetti, warns that U.S. stablecoin policies could have a more dangerous impact on the euro than the effects of trade tariffs.
Speaking at an asset management event in Milan, Giorgetti expressed concern that policies supporting dollar-pegged stablecoins could encourage European citizens to adopt alternative payment methods, potentially undermining the stability of the euro.
U.S. Approach to Cryptocurrencies Poses Even Greater Risk
Giorgetti pointed out that while much attention has been paid to the influence of trade tariffs, the new U.S. approach to cryptocurrencies—especially those tied to the dollar—poses an even greater risk.
“The general focus these days is on the impact of trade tariffs. However, even more dangerous is the new U.S. policy on cryptocurrencies and in particular that on dollar-denominated stablecoins,” he stated.
By supporting a system in which these stablecoins serve as an accessible means for cross-border transactions, the U.S. is inadvertently offering European savers a way to invest in risk-free assets and use a payment option without needing a banking relationship with U.S. institutions.
This development is of interest as dollar-pegged stablecoins have experienced explosive growth and now play a key role in the multi-trillion dollar crypto trading industry.
Stablecoins Could Erode International Stature of the Euro
They facilitate the swift movement of funds between various cryptocurrencies and traditional fiat currency, making them an increasingly attractive option not only for citizens in countries with unstable currencies but also for those in the euro zone.
Giorgetti warns that this trend could erode the international stature of the euro, urging EU authorities to take proactive measures.
As part of its effort to promote European sovereignty in the payments sphere, the European Central Bank (ECB) is working on the digital euro project.
This initiative sees a system where EU residents maintain digital euro accounts with the ECB, which can be used for online and in-store payments or easily exchanged with friends through partnerships with EU-based payment service providers.
By advancing the digital euro, European authorities are looking to strengthen the position of the euro as an international reference currency and counter the fragmentation of the EU’s payment industry.
Giorgetti’s remarks, as detailed by Reuters, show the complex interplay between U.S. financial policies and European economic stability.
Stablecoin Regulation Gains Momentum with STABLE Act
In the U.S., lawmakers have advanced the STABLE Act—short for Stablecoin Transparency and Accountability for a Better Ledger Economy—through the House Financial Services Committee in a 32–17 vote.
Sponsored by Rep. French Hill (R-AR) and Rep. Bryan Steil (R-WI), the bill outlines requirements for audits, reserves, and licensing for stablecoin issuers. The legislation seeks to establish a legal framework for the issuance and regulation of dollar-pegged stablecoins.
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