As the European Central Bank aims to complete the testing phase for a digital euro by October, a top EU official says the project is becoming more urgent in the face of America's embrace of stablecoins under the Trump administration.
The ECB has been working on a digital euro for several years, with the preparation phase getting underway in late 2023 and a final decision from lawmakers on whether to roll out a CBDC set to come by the end of the year.
Speaking this week, ECB president Christine Largarde made clear a decision will need be made soon, saying: "I think it is critically important, and for the agnostics or the sceptics, it now seems more relevant and more imperative than ever before, both on the wholesale and on the retail level."
The comments come soon after reports emerged that lawmakers are raising doubts about the central bank's project in the wake of a recent outage at its Target 2 payment system.
"This instance is a blow to the ECB’s credibility," Markus Ferber of the European People's Party tells Reuters. "People will ask legitimate questions how the ECB will be able to run a digital euro when they cannot even keep their day-to-day operations running smoothly."
At the same time, another official, European Stability Mechanism managing director Pierre Gramegna, has entered the fray, urging action to support the introduction of a CBDC.
Gramegna told reporters that the Trump administration's embrace of crypto, specifically stablecoins, could have a significant impact on Europe.
The US shift "could eventually reignite foreign and US tech giants’ plans to launch mass payment solutions based on dollar-denominated stablecoins," says Gramegna. "And if this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability."
In light of this, his organisation is backing the ECB’s "urgency in making the digital euro a reality to safeguard Europe’s strategic autonomy — this digital euro is today more necessary than ever".
Gramegna's comments on Big Tech appear to be a reference to Meta's years-long efforts to develop a stablecoin project, called Diem, for a planned digital wallet. The firm eventually admitted defeat in the face of regulatory hostility.