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Joachim Nagel, president of the Deutsche Bundesbank, has voiced support for euro-denominated stablecoins as a tool for cheaper cross-border payments, while warning that the rapid global spread of dollar-backed alternatives risks undermining Europe’s monetary sovereignty and its ability to conduct independent monetary policy.
Speaking at the New Year’s Reception of the American Chamber of Commerce in Germany in Frankfurt, Nagel outlined how euro-denominated stablecoins could complement Europe’s broader digital payments strategy while warning that dollar-backed alternatives could undermine monetary sovereignty.
Nagel’s remarks come as the European Union continues work on the digital euro and evaluates how private-sector innovations like euro-denominated stablecoins fit within the bloc’s regulatory and monetary framework.
In his speech, Nagel signaled a pragmatic shift in tone, acknowledging that euro-denominated stablecoins may serve a constructive role in financial markets.
“I see merit in euro-denominated stablecoins,” — Joachim Nagel, President, Deutsche Bundesbank.
Nagel suggested such instruments could provide a more efficient channel for cross-border transactions by firms and individuals, particularly in comparison to legacy correspondent banking systems.
While he did not detail how euro-denominated stablecoins would be supervised under existing European Union regulations, his comments indicate growing openness among policymakers to private-sector blockchain payment solutions.
At the same time, Nagel emphasized that innovation must align with financial stability and European interests.
His endorsement stops short of full regulatory approval but places euro-denominated stablecoins squarely within Europe’s evolving payments conversation.
Alongside his comments on euro-denominated stablecoins, Nagel reiterated strong support for the EU’s central bank digital currency initiative.
The European Central Bank and national central banks are advancing plans for a digital euro designed to function as a pan-European retail payment solution.
“This will be the first pan-European retail digital payment solution, based solely on European infrastructures,” — Joachim Nagel, President, Deutsche Bundesbank.
Nagel argued that a state-backed digital euro would enhance resilience in Europe’s financial system.
He has long expressed skepticism toward unbacked cryptocurrencies, instead advocating sovereign digital money as a safeguard for monetary stability.
According to Nagel, central banks have already “accomplished important exploratory work on the possible introduction of a wholesale CBDC.”
He noted that a wholesale central bank digital currency could enable financial institutions to conduct “programmable payments” in central bank money functionality that could intersect with, but differ from, privately issued euro-denominated stablecoins.
The relationship between a digital euro and euro-denominated stablecoins remains undefined.
Policymakers have yet to clarify whether such stablecoins would operate under the same infrastructure, compete directly with the digital euro, or function in parallel markets.
Nagel also issued a cautionary note regarding the global expansion of U.S. dollar-backed stablecoins.
In separate comments last week, he warned that if dollar-denominated stablecoins gain substantially more market share than European alternatives, European monetary policy “could be severely impaired,” and the continent’s sovereignty weakened.
His remarks underscore strategic concerns about currency influence in digital markets.
If global payments increasingly rely on dollar-backed tokens, Europe could face diminished control over liquidity conditions and cross-border settlement flows.
In that context, euro-denominated stablecoins are viewed not only as a payments innovation but also as a geopolitical instrument.
Ensuring that euro-based digital assets remain competitive may be critical to preserving Europe’s financial autonomy.
While European authorities weigh the future of euro-denominated stablecoins, the United States has experienced rapid growth in dollar-backed stablecoin markets.
Expansion accelerated following the passage of the GENIUS Act in July 2025, signed by President Donald Trump, which provided a clearer regulatory path for certain stablecoin issuers.
However, progress on broader U.S. crypto market structure legislation has reportedly stalled amid policy disagreements over yield mechanisms and the treatment of stablecoin rewards.
The divergence highlights how regulatory clarity can shape adoption trajectories.
For policymakers and crypto investors alike, Nagel’s endorsement of euro-denominated stablecoins marks a significant moment.
His comments suggest that European central bankers are increasingly willing to recognize private digital assets as part of the payments ecosystem provided they align with monetary stability and regulatory oversight.
As the digital euro advances and global stablecoin competition intensifies, the future role of euro-denominated stablecoins will likely depend on how effectively European regulators balance innovation, sovereignty and systemic risk.
