US President Donald Trump’s highly anticipated crypto-focused executive order has triggered a significant buzz in the community. The order outlines a broader crypto strategy, with a key focus on promoting dollar-backed stablecoins. However, the European Central Bank (ECB) proposed a digital euro to counter the President’s stablecoin plan.
ECB Seeks To Counter Trump’s Stablecoin Plan with Digital Euro
According to a Reuters report, the ECB seeks to tackle the potential consequences of Trump’s stablecoin strategy. While Trump prohibits the development of central bank digital currencies (CBDCs), the ECB proposes to introduce a digital alternative to the euro.
In response to Trump’s executive order to develop a national digital asset stockpile, ECB board member Piero Cipollone highlighted the significance of introducing a digital euro. He posited that Trump’s stablecoin plan would lure customers away from traditional banks. Further pointing out that the program could only strengthen the US dollar’s global dominance, Cipollone added,
I guess the key word here (in Trump’s executive order) is worldwide. This solution, you all know, further disintermediates banks as they lose fees, they lose clients…That’s why we need a digital euro.
Digital Euro’s Future: Banks Raise Concerns
Despite the ECB’s digital euro initiative, banks raise concerns about its impact on them. They fear that the introduction of a digital euro could push customers to move their money from traditional banks to ECB-guaranteed digital wallets. This could potentially deplete bank deposits, draining their reserves.
Currently, the central bank is analyzing the potential implications of the asset. Though the ECB has announced its interest in launching a digital euro, a final decision is subject to the European lawmakers’ approval.
This happens on the heels of discussions surrounding banks’ acceptance of crypto payments and other trading services. Experts like Circle CEO Jeremy Allaire believe that the Trump administration will link banks with crypto platforms, making crypto trading services easier.
Donald Trump’s Crypto-Focused Executive Order
Following an initial silence on crypto, Donald Trump signed an executive order to establish a national digital asset stockpile. Reportedly, the Presidential Working Group on Digital Asset Markets will endeavor to solidify the US’ position at the forefront of the global digital finance ecosystem.
Notably, the group will be responsible for creating a comprehensive framework to govern cryptocurrencies, including stablecoins. Trump announced his agenda to “promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.” In contrast, the ECB is exploring the introduction of a CBDC, the digital euro.
Trump also revealed his stance against CBDCs, preventing agencies from establishing and issuing these centralized currencies. While the ECB’s proposal opposes Trump’s strategy, it highlights the contrasting approaches of the US and Europe to digital finance.
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