Philip Lane, the chief economist at the European Central Bank (ECB), emphasized the need for a digital euro to address the increasing influence of dollar-pegged stablecoins and U.S.-based electronic payment systems within Europe’s financial landscape.
According to Lane, the rise of electronic payment methods from major tech companies like Apple Pay, Google Pay, and PayPal “exposes Europe to risks of economic manipulation and coercion.” These comments were made during a speech at University College in Cork, Ireland, on Thursday.
“A digital euro would offer a secure and universally accepted digital payment method governed within Europe, thereby decreasing dependence on foreign entities,” Lane explained. “Having the digital euro available would also reduce the chances of foreign-currency stablecoins becoming a prevalent medium of exchange in the eurozone.”
Lane highlighted that a staggering 99% of the stablecoin market is comprised of tokens tied to the U.S. dollar. This trend has the potential to allow dollar-linked stablecoins to make gains in the euro area, resulting in payment systems that are “anchored by the dollar instead of the euro.”
The ECB, mirroring the actions of central banks in other advanced economies around the globe, is looking into the prospect of developing a central bank digital currency (CBDC). The competition created by stablecoins and corporate-controlled payment solutions are frequently cited as primary motives for pursuing this direction.
Lane indicated that the argument for a CBDC might be particularly compelling for the ECB, given that the eurozone includes many countries. The euro is utilized across 20 EU member states, yet the eurozone suffers from a lack of a cohesive payment system due to varying legacy standards from one nation to another.
“The digital euro represents a unique chance to address the ongoing fragmentation within retail payment systems throughout the euro area,” he remarked.