Europe must issue Euro stablecoins to counter U.S. market control, ESM director warns

Europe’s top financial officials are calling for urgent action to issue a euro-backed stablecoin and strengthen the region’s control over digital payments.

Pierre Gramegna, Managing Director of the European Stability Mechanism (ESM), warned that Europe risks losing monetary sovereignty to U.S. dollar-dominated stablecoins if it delays innovation.

“Europe should not depend on U.S. dollar-denominated stablecoins, which currently dominate global markets,” Gramegna said during a Thursday hearing on the eurozone’s economic outlook. “Stablecoins are inevitable. Europe must accelerate the creation of euro-backed stablecoins by domestic issuers to protect financial independence.”

His remarks underline growing fears that America’s leadership in stablecoin adoption could erode Europe’s influence in global finance.

Digital Euro Gains Momentum Amid Growing Stablecoin Pressure

Gramegna’s comments come as the European Central Bank (ECB) intensifies efforts to launch the digital euro by 2029. The move follows the United States’ introduction of the GENIUS regulatory framework, which boosted the growth of dollar-backed stablecoins like Tether (USDT) and Circle’s USD Coin (USDC)—together commanding over 99% of global market share.

Paschal Donohoe, President of the Eurogroup, stressed the urgency of matching this momentum.

“The digital euro can strengthen Europe’s economy, but it must go hand-in-hand with a strong euro-backed stablecoin ecosystem,” he said.

ECB Executive Board Member Piero Cipollone added that progress among EU member states marks “a major breakthrough” toward digital currency adoption, with legislative frameworks expected by early 2026.

Private Euro-Backed Stablecoins Seen as Key Complement to the Digital Euro

Unlike the digital euro, which will be central bank–issued, euro-backed stablecoins are expected to come from private-sector issuers under the EU’s Markets in Crypto-Assets (MiCA) framework. MiCA provides clear rules for stablecoin issuance, transparency, and reserve requirements, creating an environment for compliant innovation.

Jürgen Schaaf, adviser to the ECB, emphasized that properly regulated euro-backed stablecoins are essential for monetary sovereignty.

“Without credible alternatives, the EU risks deepening its dependence on the dollar system,” Schaaf warned.
He also noted that while the U.S. GENIUS Act offers flexibility, Europe must not fall behind in implementation.

Similarly, Bank of Italy Governor Fabio Panetta cautioned that regulatory delays have slowed the development of euro-backed stablecoins.

“Stablecoins and central bank digital currencies must advance together if Europe intends to remain competitive,” he said.

Private Sector Drives the Euro-Backed Stablecoin Revolution

In a significant step forward, nine major European banks—including ING, UniCredit, CaixaBank, and Danske Bank—announced plans to launch a euro-backed stablecoin consortium by 2026. The initiative, compliant with MiCA, aims to enable real-time, 24/7 cross-border payments using blockchain technology.

The European Central Bank has also approved two distributed ledger technology (DLT) pilot projects—Pontes and Appia—to test blockchain-based settlement systems for wholesale transactions.

Analysts note that euro-pegged stablecoins currently represent less than €350 million in circulation, a small fraction of the global stablecoin market dominated by U.S. dollar tokens. However, momentum is building rapidly.

“Launching reliable euro-backed stablecoins is both an economic and strategic necessity,” said Dr. Clara Meijer, Senior Policy Fellow at the Bruegel Institute. “Europe’s relevance in digital finance depends on its ability to innovate at scale.”

The Road Ahead: Europe’s Path to Digital Monetary Sovereignty

As blockchain technology transforms global finance, Europe faces a defining choice—embrace innovation or risk marginalization. Policymakers agree that euro-backed stablecoins and the digital euro must evolve together to safeguard Europe’s autonomy in digital payments.

Pierre Gramegna concluded with a call to action: “Europe must move from observation to execution. Stablecoins are here to stay, and the euro must take its rightful place in the digital economy.”

With regulatory clarity improving and the private sector actively participating, the EU is positioning itself to compete head-to-head with U.S.-led stablecoin dominance and redefine the future of digital monetary sovereignty.