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

@Roy, this matter is related to regulation and legal policy, so I’m assigning it to you.

@Lilly, please oversee this task, as it ties into law and regulations.

Key Event: On 2025-07-28, ECB adviser Jürgen Schaaf highlighted that a central bank digital currency (CBDC) like the digital euro alone may not sufficiently counter the dominance of US dollar stablecoins. Instead, the EU may need a multi-pronged approach, including promoting regulated euro-pegged stablecoins, leveraging distributed ledger technology (DLT), and fostering global coordination on stablecoin regulations. This reflects growing EU concerns about monetary sovereignty amid the rise of US stablecoins.

To the Editor-in-Chief,

According to a blog post on the European Central Bank's (ECB) website on July 28, 2025, ECB adviser Jürgen Schaaf has expressed that a central bank digital currency (CBDC) alone may not be enough to counter the dominance of U.S. dollar stablecoins. He suggests that the European Union should consider a multi-faceted approach to maintain its monetary sovereignty.

Schaaf's blog post outlines several strategic options for the EU. These include providing more support for well-regulated euro-denominated stablecoins, which could meet market demands and strengthen the international role of the euro. He also highlights the importance of leveraging distributed ledger technology (DLT) to improve wholesale and cross-border payments. The digital euro is presented as a complementary part of this broader strategy, serving as a defense for European monetary sovereignty in point-of-interaction payments.

The concerns in Europe have grown, particularly after the U.S. passed the GENIUS Act to create a regulatory framework for stablecoins, aiming to reinforce the dollar's global status. Schaaf argues that the dominance of U.S. dollar stablecoins could lead to higher borrowing costs for Europe, diminished monetary policy autonomy, and increased geopolitical dependence on the U.S.

The ECB is taking steps to address these challenges. It has approved two DLT pilot projects, Pontes and Appia, to enhance Europe's payment infrastructure. The ECB's Governing Council is expected to decide on the future of the digital euro project by the end of 2025.

Schaaf also emphasizes the need for stronger global coordination on stablecoin regulation to avoid regulatory arbitrage and further U.S. dollar dominance. This reflects a growing consensus that a combination of private innovation and public initiatives will be necessary to navigate the evolving digital finance landscape.

@Roy, your article on Schaaf’s ECB blog post should focus on explaining the key event: his assertion that a digital euro alone won’t solve the challenge of U.S. dollar stablecoin dominance. Lead with the main takeaway, then highlight his proposed multi-faceted strategy: supporting euro-backed stablecoins, leveraging DLT, and global regulatory coordination. Ensure you contextualize the urgency—rising concerns after the GENIUS Act and risks like diminished EU monetary autonomy. Avoid overloading with technical pilots (Pontes, Appia); a brief mention of ECB's ongoing action is enough. Keep it clear, actionable, and policy-focused—don’t dilute the angle with too much detail.

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

• Digital euro alone won’t challenge U.S. stablecoin dominance, says ECB adviser Jürgen Schaaf.
• Proposes broader strategy with euro-backed stablecoins, DLT innovations, and global regulatory coordination.

On July 28, 2025, in a European Central Bank 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 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 capable of meeting market demand, providing a counterweight to the widespread adoption of stablecoins pegged to the U.S. dollar. These stablecoins, Schaaf argued, could reduce geopolitical dependency on the U.S. while enhancing the European Union’s financial autonomy in an increasingly digitized global economy.

The adviser also underlined the critical role of distributed ledger technology (DLT) in modernizing wholesale and cross-border payment systems to strengthen European financial infrastructure. While describing the digital euro as a crucial tool to improve point-of-interaction payments, he noted that it should form part of a broader, integrative plan rather than a standalone solution.

Heightened concerns in Europe over the U.S. GENIUS Act, which reinforced stablecoin regulations to underpin the dollar’s global influence, were also a focal point. Schaaf warned that the persistent dominance of U.S. dollar stablecoins could drive up borrowing costs in Europe while diminishing the effectiveness of the European Union’s monetary policy in steering its economy.

The ECB is already taking steps to address these challenges, such as approving two DLT pilot projects—Pontes and Appia—to enhance Europe’s payment infrastructure. Additionally, the ECB’s Governing Council is set to decide on the future direction of the digital euro project by year-end 2025, signaling continued efforts to safeguard European monetary sovereignty.

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