Euro Stablecoins, DLT May Counter U.S. Dollar, ECB Adviser Says

• Digital euro alone insufficient to challenge U.S. stablecoin dominance.
• Proposes broader strategy with euro-backed stablecoins, DLT innovations, and global regulatory coordination.

On June 28, 2025, in a European Central Bank (ECB) blog post, adviser Jürgen Schaaf stressed that a central bank digital currency (CBDC) alone may not be enough to combat the global dominance of U.S. dollar stablecoins. The post outlined the growing need for the European Union (EU) to adopt a multi-pronged strategy to preserve its monetary sovereignty.

Schaaf proposed several initiatives to bolster the euro’s international standing. He emphasized supporting well-regulated, euro-pegged stablecoins that can meet market demand. These stablecoins would provide a counterweight to the widespread adoption of stablecoins pegged to the U.S. dollar. Schaaf argued these stablecoins could reduce geopolitical dependency on the U.S. and enhance the EU’s financial autonomy in an increasingly digitized global economy.

The adviser also underlined the critical role of distributed ledger technology (DLT). He explained it can modernize wholesale and cross-border payment systems and strengthen European financial infrastructure. Meanwhile, Schaaf described the digital euro as a crucial tool to improve point-of-sale payments. However, he noted it must be part of a broader, integrative plan, not a standalone solution.

Schaaf also highlighted heightened European concerns over the U.S. CLARITY Act, which reinforces stablecoin regulations to underpin the dollar’s global influence. He warned that the persistent dominance of U.S. dollar stablecoins could drive up borrowing costs in Europe. At the same time, it could diminish the effectiveness of the EU’s monetary policy in steering its economy.

The ECB is already addressing these challenges. It approved two DLT pilot projects—Project Genesis and Project Agora—to enhance Europe’s payment infrastructure. Additionally, the ECB’s Governing Council will decide on the future direction of the digital euro project by year-end 2025. This decision signals continued efforts to safeguard European monetary sovereignty.

In his conclusion, Schaaf called for deeper international coordination on stablecoin regulation. He argued this is necessary to prevent the exploitation of regulatory discrepancies that could further entrench U.S. dollar dominance. He reiterated the importance of combining private-sector innovation with public-sector strategies to navigate the complex dynamics of the global financial landscape.