Why a Digital Euro really matters (beyond “stablecoin summer”)

Goldman calls this “stablecoin summer,” and the FT reports that the EU is accelerating digital euro plans after new U.S. stablecoin laws stirred competitiveness fears. Officials argue a digital euro would provide central-bank-backed payments as cash use declines and bolster the euro’s global role; they also worry U.S. rules will turbocharge dollar stablecoins in Europe.

The ECB, however, needs to sharpen its communications on the purpose of a digital euro. The underlying logic the FT reports is off: people choose dollar stablecoins because they are dollars. Even if euro demand were strong, the proposed digital euro is account-based—unlike bearer-style stablecoins—and will require onboarding.

There are also good reasons not to court large external holdings: a stronger euro could weigh on exports; Europe has AML/CFT responsibilities; and it should avoid eroding other countries’ monetary autonomy. Meanwhile, Europe already regulates venues offering stablecoins in Europe—dollar, euro, or otherwise. It can make it hard for Europeans to buy unregulated stablecoins if it chose to.

Of the standard arguments, the cash-access point is compelling; an offline-capable digital euro deserves priority. 

Why a digital euro makes sense

But equally the “CBDCs solve no problem” position is also short-sighted.

The case for a digital euro rests on:
Strategic autonomy. Reduce dependence on non-European card networks and finally guarantee that every cardholder can pay in any euro-area country (still not universally true).
A programmable backbone. Use unified/interlocking ledgers so tokenised bank deposits settle in tokenised central-bank money—preserving the two-tier system and a flexible, credit-responsive money supply.

As Andreas Dombret and I have argued, being anti-stablecoins is not anti-innovation position. Unified ledgers can strip out intermediary layers, cut cross-border costs, let smart contracts replace escrow and some collateral workflows, and unlock liquidity in “frozen” assets with real-time performance data.

The real debate isn’t tech vs. status quo; it’s how to apply these capabilities to strengthen a powerful yet delicate credit-money system. We can have the cake and eat it: innovation—without tying itself to fully-reserved private money.