Pressure from the US pushes the ECB to accelerate the deployment of the digital euro

The financial technology race among major regions has reached its peak. In the context of the Trump administration promoting stablecoin policies to strengthen the dollar’s position, the European Central Bank (ECB) has just announced that it has completed all technical preparations for the digital euro and is awaiting approval from EU lawmakers. This marks a significant milestone in the development journey of the bloc’s public digital currency.

Preparations Completed, Awaiting Orders from Lawmakers

According to a statement by ECB President Christine Lagarde at the end of the year, the organization has built the necessary infrastructure and protective measures. “We have completed our work, prepared everything, but now it’s up to the European Council and the European Parliament to determine whether the Commission’s proposal is appropriate, and how to turn it into law or amend it,” Lagarde stated.

The European Council and the European Parliament are reviewing a proposal to allow the issuance of the digital euro in the form of cash for the public. What is the digital euro? It is a form of digital central bank money issued by the ECB, with legal status equivalent to cash, distinctly different from stablecoins—private tokens backed only by reserves or corporate commitments.

Purpose and Benefits of Public Digital Currency

The digital euro is designed to “ensure that central bank money as legal tender remains available to the public, while providing a modern and cost-efficient means of payment,” according to the proposal. This tool could also offer “high security in digital payments” and support financial stability, monetary sovereignty, privacy, and financial inclusion.

Lagarde emphasized the importance: “Our ambition is to ensure that in the digital age, there remains a stable form of currency as a pillar for the financial system.”

The Need Created by International Competition

The urgency of this issue stems from changes in U.S. cryptocurrency policies. In January, ECB Executive Board Member Piero Cipollone emphasized that the Trump administration is developing stablecoin plans to promote the dollar, forcing Europe to act quickly to protect its monetary sovereignty. Cipollone pointed out that European lawmakers and politicians are “increasingly interested” in this discussion.

Meanwhile, President Donald Trump signed the GENIUS Act into law in July and later signed an executive order in January banning federal agencies from developing CBDCs in the U.S. Trump publicly stated that he would “never allow” CBDC because he believes it would give the government too much control.

Historical Context of the Discussion

Since 2021, European central banks have warned that without issuing a digital euro, monetary control could fall into the hands of private or foreign payment systems as cash usage declines. The discussion has gradually shifted from principles to implementation, with European organizations accelerating clear timelines toward the potential launch by the end of this decade.

Recently, the International Monetary Fund (IMF) warned that private digital currencies, including stablecoins, could weaken domestic monetary policy and global financial stability, thereby increasing pressure on the ECB to act.

This move by the ECB demonstrates Europe’s more assertive stance in the digital sovereignty race on the international stage.