Joachim Nagel, President of the German Central Bank (Deutsche Bundesbank) and member of the European Central Bank (ECB) Board of Governors, said that issuing stablecoins pegged to the euro could reduce cross-border payment costs and be an important measure against the risk of “dollarization” posed by dollar-based stablecoins.
Speaking at the German-American Chamber of Commerce, Nagel emphasized that euro-denominated stablecoins can provide individuals and businesses with a low-cost and fast means of international payments.
According to Nagel, replacing a country’s local currency with a dollar stablecoin effectively means dollarizing the country’s economy. This, he argues, could weaken the effectiveness of monetary policy and negatively impact Europe’s economic sovereignty.
Nagel also said the ECB is evaluating the use of distributed ledger technology (DLT) in financial products other than central bank money. Options such as tokenized deposits and euro stablecoins are reportedly being considered.
Mr. Nagel also touched on the ECB’s Digital Euro project and reminded that the ECB plans to launch a digital euro in 2029. He also noted that the ECB is working on a “wholesale” CBDC that would allow financial market institutions to conduct programmable transactions.
The announcement comes at a time when Europe is accelerating its search for alternatives to dollar-centric solutions in the field of digital finance.
*This is not investment advice.
