Fabio Panetta, the Governor of the Bank of Italy, has emphasised that a digital euro is more effective than regulation alone. It can better address the growing risks associated with cryptocurrencies.
In his annual economic remarks, Panetta said the EU must advance the CBDC project to protect financial stability and meet growing demand for secure digital payments.
Panetta noted that the Markets in Crypto-Assets Regulation (MiCA), which came into full force in late 2024, has had minimal influence on stablecoin adoption in Europe.
Only a small number of electronic money tokens (EMTs) have been issued, with limited circulation and little interest from supervised intermediaries in Italy. Although MiCA encourages transparency, it has not stimulated significant crypto development in the region.
The governor also warned that European citizens remain exposed to risks due to inconsistent regulatory standards worldwide.
He urged stronger international cooperation, saying only a central bank-backed digital euro can ensure trust, efficiency, and security in digital payments.
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At a recent speech in Berlin, European Central Bank President Christine Lagarde highlighted the potential of the euro to take on a greater international role amid growing uncertainty in the global monetary system. With the dominance of the US dollar increasingly under scrutiny and central banks turning to gold at levels unseen in decades, Lagarde outlined how a digital euro could be pivotal in shifting the balance of global finance.
Lagarde emphasised that the euro already accounts for around 20% of global foreign exchange reserves but still lags far behind the US dollar’s 58%. She argued that a more internationally accepted euro would shield Europe from exchange rate volatility, reduce borrowing costs, and help protect the EU from coercive economic measures.
One of the key steps in this direction is the ongoing development of a digital euro—an initiative the ECB is pursuing to modernise cross-border payments and reinforce the euro’s international utility. The ECB President noted that trade alone won’t be enough to elevate the euro to global reserve status.
For the euro to increase its global status, we need to build on three foundations:
Investors also need confidence in Europe’s geopolitical strength and legal institutions. She linked the US dollar’s global standing to its economy, military alliances, and legal predictability—areas where Europe must step up.
A digital euro, supported by robust capital markets and legal credibility, could become a cornerstone in this strategy. Lagarde concluded with a call for bold action.
The global economic landscape is shifting, and Europe must seize this ‘global euro moment.’ But success is not guaranteed, she warned.
For the euro to rise as a true rival to the dollar, the EU must act decisively, invest in unity, and deliver on reforms that inspire trust and stability, both politically and economically.
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The ECB has renewed its push for a digital euro to counter the growing dominance of US dollar-backed stablecoins in Europe. Piero Cipollone, an ECB executive board member, has raised concerns over the growing popularity of these stablecoins.
He argues that a central bank digital currency (CBDC) would protect the eurozone’s monetary sovereignty. Cipollone argued that a digital euro would prevent foreign currency stablecoins from becoming widely used in the euro area.
He warns that Europe’s reliance on foreign payment systems undermines its financial sovereignty. Concerns have arisen over the US’s push for dollar-backed stablecoins.
ECB called for a public-private partnership to create a digital euro, preserving European monetary independence under EU law.
Despite these efforts, the digital euro faces opposition, particularly over concerns around data privacy and consumer adoption. ECB acknowledges that digital payments are becoming increasingly prevalent, especially for online transactions.
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Eurozone finance ministers have raised concerns over the United States’ shift towards embracing cryptocurrencies, warning that it could pose risks to Europe’s monetary sovereignty and financial stability.
The discussion follows President Donald Trump’s executive order to establish a strategic reserve of cryptocurrencies using government-owned tokens, signalling a major policy shift from the previous administration.
Officials stressed the importance of accelerating the European Central Bank‘s plans to launch a digital euro to maintain control over the region’s financial system.
The head of the European Stability Mechanism, Pierre Gramegna, warned that the United States stance could encourage major technology firms to relaunch digital payment systems using dollar-backed stablecoins, potentially challenging the euro’s dominance in the global financial system.
Eurozone leaders are concerned that a resurgence of stablecoin-based payment platforms could undermine the euro and increase reliance on US-backed digital assets.
Policymakers emphasised that Europe must take proactive steps to safeguard its financial autonomy, ensuring that the euro remains a strong and stable currency in an increasingly digital economy.
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Christine Lagarde, President of the European Central Bank (ECB), has confirmed the bank’s target to finalise preparations for the digital euro by October 2025. However, the project’s actual launch remains uncertain, as it hinges on legislative approvals and cooperation from various stakeholders. Despite the urgency, the ECB is facing delays due to the complexity of the legislative process.
The digital euro will consist of two components: a retail version for public use and a wholesale version for financial institutions. The retail version promises privacy protections, free transactions, and offline functionality, while the wholesale arm aims to streamline interbank settlements and cross-border payments. Although preparations are underway, experts predict that a full launch may not occur until 2028.
Privacy concerns and potential impacts on commercial banks are among the challenges the ECB is addressing. To reassure the public, the ECB has committed to strong privacy standards and is exploring blockchain technologies like Ethereum to underpin the digital euro. The project comes as global competitors, such as China’s digital yuan and the rise of US stablecoins, intensify the pressure on Europe to maintain its monetary sovereignty.
While the ECB is making significant strides, the final approval and launch of the digital euro will depend on future legislative decisions and overcoming technical hurdles. The timeline remains uncertain, but the ECB’s preparations signal that the eurozone is keen to remain competitive in the digital currency space.
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The European Central Bank is stepping up its efforts to build a blockchain-based payments system, a move which could pave the way for a digital euro. Announced on Thursday, the initiative will unfold in two phases. The first phase will involve developing a platform for settling transactions in central bank money through a link with the TARGET system, which already facilitates payments across the eurozone.
The ECB plans to explore a more integrated, long-term blockchain solution for processing central bank money transactions in the second phase. Executive Board member Piero Cipollone described the project as a step towards improving European financial markets through innovation. The ECB believes this approach could strengthen Europe’s monetary system while reducing dependence on non-European payment providers.
The push for a digital euro aligns with the ECB’s broader goal of unifying Europe’s capital markets. Since 2021, the bank has been studying how to design and distribute a central bank digital currency (CBDC). As it refines its blockchain-based system, the ECB will consult with public and private stakeholders to ensure it meets the needs of European citizens. The full timeline for implementation will be announced at a later stage.
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Three Dutch firms have joined forces to launch EURQ, a blockchain-based digital euro designed to merge decentralised technology with traditional financial systems. The collaboration, involving Quantoz Payments, NPEX, and Dusk, marks the first time a licensed stock exchange will integrate electronic money tokens into its operations. The initiative, fully compliant with European regulations, aims to provide businesses and individuals with a secure, regulated digital euro.
EURQ is built to meet the Markets in Crypto-Assets Regulation (MiCA) requirements, allowing the seamless trading of real-world assets on-chain via the Dusk and NPEX networks. Quantoz Payments will establish a regulatory-compliant framework, enabling faster and more efficient cross-border transactions. The initiative is expected to set a new standard in financial innovation, demonstrating how blockchain can enhance existing monetary systems.
The project’s leaders stress that EURQ is more than just a stablecoin—it is a true digital representation of the euro, fully approved by regulators. They see it as a significant step towards integrating digital assets into mainstream finance, promoting greater transparency and trust within the financial sector. This development highlights the evolving role of blockchain in regulated markets, paving the way for further advancements in digital finance.
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Germany’s central bank chief, Joachim Nagel, has reinforced his scepticism towards Bitcoin, dismissing it as unsuitable for central bank reserves. Speaking at an event hosted by the London School of Economics, Nagel argued that Bitcoin is not a genuine currency but rather an asset class lacking liquidity and security. He also criticised the pro-crypto stance of former US President Donald Trump, particularly proposals to establish a strategic Bitcoin reserve. Comparing Bitcoin to the Dutch Tulip Mania of the 17th century, he warned of its speculative nature and volatility.
In contrast, Nagel is a strong advocate for the digital euro, highlighting its potential to strengthen Europe’s financial sovereignty. He cautioned that reliance on private sector payment solutions, particularly from US firms, could expose Europe to geopolitical risks. While the long-term effects of central bank digital currencies (CBDCs) on interest rates remain uncertain, he emphasised their importance in ensuring a resilient financial system.
Meanwhile, the US is shifting its regulatory approach to cryptocurrency. Under Acting SEC Chair Mark Uyeda, new policies have allowed banks to re-enter the crypto custody sector. The SEC recently replaced its restrictive guidance, paving the way for regulated financial institutions to hold digital assets. As these developments unfold, Bitcoin is currently trading at $96,318, marking a slight decline over the past week.
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The European Central Bank (ECB) is keen to accelerate the creation of the digital euro, particularly following US President Donald Trump’s endorsement of stablecoins linked to the US dollar. ECB board member Piero Cipollone highlighted that Trump’s backing could push European lawmakers to fast-track the legislation for the digital euro. The ECB envisions the digital euro as a central bank-backed online wallet, offering an alternative to major US payment providers like Visa and PayPal.
Despite the European Commission’s proposal for digital euro legislation in June 2023, progress has been slow due to some scepticism in the political and banking sectors. Cipollone remains optimistic that recent developments, including the rise of US stablecoins, will prompt greater urgency from EU lawmakers. He expressed hope that the digital euro legislation could be finalised by summer, allowing for negotiations with the Commission to be wrapped up before November.
Cipollone also raised concerns over the growing use of US stablecoins in Europe, warning that it could lead to a shift of deposits from European banks to the US. He acknowledged bankers’ fears that a digital euro could have a similar effect. Still, he reassured that the ECB would likely limit the amount of digital euros users can hold to prevent destabilisation. Several countries, including Nigeria and China, have already launched central bank digital currencies, while many others, such as Russia and Brazil, are in the testing phase.
Eurozone banks should embrace a digital euro to counter United States President Donald Trump’s new push to promote dollar-backed stablecoins globally, European Central Bank (ECB) board member Piero Cipollone stated on Friday. Cipollone warned that stablecoins, which function similarly to money market funds, could further erode banks’ revenues and customer base, strengthening the need for an ECB-backed digital currency.
A digital euro would provide a secure, centralised online wallet guaranteed by the ECB but managed by private banks, allowing even unbanked individuals to make payments. However, eurozone banks have raised concerns about losing deposits to this digital alternative. Cipollone emphasised that such a move would safeguard Europe’s financial system from potential disruptions caused by stablecoins gaining global traction.
While the ECB continues to experiment with a digital euro, a final decision depends on European lawmakers approving the necessary legislation. Meanwhile, Trump’s executive order on Thursday prohibited the Federal Reserve from issuing its own digital currency. Over 40 countries, including China and Russia, are already piloting central bank digital currencies, putting pressure on the eurozone to accelerate its digital efforts.
