EU Worried Trump’s Crypto Push Could Impact Financial Stability
Finance officials in the European Union are worried US President Donald Trump’s pivot towards digital assets could impact the Eurozone’s financial and monetary stability.
Trump vowed to be a pro-crypto president when campaigning and signed an executive order last week establishing a strategic Bitcoin reserve and cryptocurrency stockpile.
Trump’s Crypto Pivot Concerns EU Officials
The Trump administration’s actions are a significant pivot from the previous Biden administration, which believed in a “regulation by enforcement” approach. According to European Stability Mechanism (ESM) managing director Pierre Gramegna, the US crypto pivot could reignite foreign and tech giants’ plans to launch mass payment solutions based on a dollar-denominated stablecoin. He added that if such an endeavor were successful, it could impact the Eurozone’s monetary sovereignty and financial stability.
“The US administration is favorable toward cryptocurrencies, and especially dollar-denominated stablecoins, which may raise certain concerns in Europe. A US crypto pivot could eventually reignite foreign and US tech giants’ plans to launch mass payment solutions based on the dollar-denominated stablecoin, which may raise certain concerns in Europe that could reignite foreign and US tech giants’ plans to launch mass payment solutions based on dollar-denominated stablecoins”
Chairman of the Ministers Paschal Donohoe said policy changes and developments in other jurisdictions could have significant consequences in Europe. He also stressed the creation of a digital euro by the European Central Bank (ECB) was now critical to staying ahead of the curve.
“Policy developments in other jurisdictions can have important consequences for us here in Europe. These discussions are fundamentally linked to our own autonomy and the resilience of our currency.”
Digital Euro Crucial
The ESM also supported the ECB’s urgency to create a digital euro to safeguard Europe’s strategic autonomy. The ESM is an intergovernmental organization established by member states of the euro area. Its primary function is to help overcome financial crises and maintain long-term financial stability.
The European Central Bank stated in February it is expanding the development of its central bank digital currency (CBDC) payment system to settle transactions between institutions. The ECB has been working on creating a CBDC since 2020, including a consumer-facing digital euro and wholesale cross-border settlement between central banks. The ECB has also rejected adding Bitcoin (BTC) to its monetary reserves or allowing other European banks to do so. ECB President Christine Lagarde denounced the notion of adding crypto assets to its monetary reserves, stating that reserves of central banks must be liquid, secure, and safe, and said she was confident BTC would not enter reserves under the European Council.
Meanwhile, President Trump has dismissed the notion of a Federal Reserve CBDC and signed an executive order prohibiting the establishment, issuance, and circulation of a US CBDC.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
