Piero Cipollone, a member of the European Central Bank’s executive board, has recently emphasized the importance of developing a digital euro, especially following notable shifts in the stablecoin landscape in the U.S. His renewed advocacy comes on the heels of former President Donald Trump’s recent executive order aimed at boosting America’s standing in digital financial innovations.
Implications of Trump’s Executive Order
According to a January 24 report by Reuters, Cipollone expressed his apprehensions that Trump’s directive could motivate people to shift away from conventional banks in favor of more digital alternatives. Signed on January 23, the executive order mandates the creation of a working group. This group is expected to explore regulatory measures for stablecoins while promoting the global adoption of credible stablecoins backed by the U.S. dollar.
Cipollone pointed out that the implications of these developments extend beyond the U.S., suggesting that the surge of stablecoins might threaten the profitability of traditional banks by reducing their fee income and client base. This scenario, he argues, underscores the urgency behind establishing a digital euro.
Status of the Digital Euro Initiative
As a leading voice within the ECB on the digital euro proposal, Cipollone notes that this initiative is currently in its preparatory phase, with a decisive announcement on its potential launch expected by October 2025.
However, the viability of Trump’s order is still in question, particularly given the multitude of legal challenges he has encountered since assuming office on January 20. Apart from addressing stablecoins, the order could potentially stifle the progress of a U.S. central bank digital currency (CBDC) and instruct the working group to investigate the prospect of a national cryptocurrency reserve.
Exclusion of Key Financial Agencies
Furthermore, if implemented as planned, Trump’s directive would see the exclusion of representatives from the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) from the cryptocurrency working group. Caitlin Long, founder and CEO of Custodia Bank, hinted that this exclusion may arise from previous accusations against these agencies for constraining banking access for cryptocurrency firms during the Biden administration.
Source: Cointelegraph
