Europe must embrace an Digital version of its currency (or a digital euro) to stand strong against the rising popularity of Stablecoins and the widespread use of payment systems from the United States.
It is the message from Philip Lane, chief economist at the European Central Bank (ECB).
According to a ReportLane believes that this trait is important for Europe to maintain its financial independence when the geopolitical landscape becomes more fragmented. He expressed concerns about the potential risks of being too much due to payment methods that are not under European control.
Concerns about foreign payment systems
Lane pointed out Dangers to rely on payment systems that originate outside Europe. He suggests that this addiction can make the region vulnerable.
The increasing use of Stablecoinswhich are digital currencies that are often bound to the value of traditional currencies such as the US dollar, also poses a challenge for the euro’s position.
Lane believes that if Europe does not act, these foreign controlled alternatives can become dominant and weaken Euro’s role in the financial system.
As of today, the market cap of cryptocurrencies stood at $2.7 trillion. Chart: TradingView
Digital euro as a secure solution?
ECB sees the issuance of a Digital euros as a way to provide a secure and generally accepted means of payment for all Europeans.
The new currency would be controlled within Europe, which means that the continent more control over its financial system. With its own digital currency, Europe may be able to reduce payment services from abroad.
An image rendering of a digital euro. Source: Gemini Imagen.
Maintain Europe’s financial autonomy
Lane emphasized that in a more polarized world, it is important for Europe to protect its fiscal independence. He said that a digital euro is an important step towards realizing this goal.
This would ensure that Europe has a sound payment system free from the rules or control of other countries. This step is considered integrated to protect Europe’s economic sovereignty in the future.
Counteracts foreign stablecoin -hegemony
The main reason for promoting digital euros is to prevent Stablecoins in other currencies that dominate Europe.
The ECB features that if these Stablecoins in foreign currencies become strongly popular, they would remove the euro of its status as the primary currency in Europe.
A digital euro would offer a European solution, provided that individuals and companies in Europe remain and trust the euro for their operations.
The ECB considers that the leading -thinking initiative is required to defend the integrity and stability of the European financial system against new digital payment techniques.
Image from Gemini Imagen, Chart from TradingView
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