Joachim Nagel, a member of the European Central Bank’s Governing Council, stated that a full central bank digital currency (CBDC) and euro-linked stablecoins could strengthen the euro’s international role. He emphasized that these measures would enhance the euro’s global appeal and reduce the European economy’s reliance on the US dollar. CBDCs, official digital currencies issued by central banks, are being introduced worldwide to bring transparency and efficiency to financial systems. In the European Union, such initiatives are seen as crucial for maintaining the euro’s stability and boosting its global reputation. Stablecoins are cryptocurrencies pegged to stable assets like the euro or US dollar, minimizing price volatility. Dollarization refers to the preference of various countries or markets to use the US dollar as their primary currency, potentially diminishing the global significance of the euro and other currencies. European authorities aim to counter this trend by promoting digital currencies that strengthen and increase the acceptance of the euro. If successfully implemented, euro-linked stablecoins and CBDCs could invigorate the European financial economy, simplify transactions, and increase the euro’s share in the global financial system. However, technical and regulatory challenges must be addressed to ensure financial stability. The European Central Bank continues research and planning to further solidify the euro’s status as a global currency and improve its position in international financial markets.
Source: decrypt
