The recent approval of a U.S. stablecoin law has prompted a reevaluation of the digital euro strategy by European Union policymakers. The focus keyword, digital euro, has come under the spotlight as legislators across the bloc scramble to keep pace with America’s swift move into regulated digital currency frameworks.

U.S. Stablecoin Regulation Sparks Urgency in the EU

The U.S. Congress recently passed the GENIUS Act, creating a structured legal framework for the country’s vast $288 billion stablecoin market. With leading dollar-backed tokens like Tether’s USDT and Circle’s USDC dominating global circulation, European regulators were reportedly caught off guard by the speed and significance of these developments, according to the Financial Times.

Concerns are growing within Europe that such dominance could further entrench the U.S. dollar’s role in cross-border payments. Without a timely rollout of the digital euro, European monetary autonomy could be at risk as deposits shift toward U.S.-denominated digital assets.

Public Blockchain Considerations Enter ECB Conversations

In a notable pivot, European Central Bank (ECB) officials are revisiting their earlier stance on infrastructure for the central bank digital currency (CBDC). Initially favoring a centralized and privately controlled system for reasons of privacy and security, the ECB is now also evaluating public blockchain options like Ethereum and Solana.

This shift comes amid strategies to make the digital euro not only a sound store of value but also a competitive tool against dollar-based assets in international financial markets. Sources suggest that decentralized platforms could enhance both accessibility and liquidity, enabling the euro to circulate more freely beyond Europe’s borders.

European policymakers are reconsidering blockchain infrastructure for the digital euro to match U.S. momentum.

Digital Euro Seen as an Answer to Private Payment Systems

The ECB has been exploring a sovereign-backed digital euro for years. Their aim is to create a public, reliable counterpart to rapidly expanding private payment networks and stablecoins. As cash usage declines across the eurozone, the central bank has positioned the digital euro as a future-proof alternative that reinforces the strength and control of the single currency.

However, with progress on the U.S. side accelerating, European officials now fear a capital outflow toward more established, regulated, dollar-based digital instruments unless the ECB expedites its own digital initiative.

Existing Euro-Linked Stablecoins and Competitive Pressures

While several euro-pegged stablecoins are already on the market—Circle’s EURC among them—they lack the backing and influence of a central bank-issued digital currency. A truly official digital euro would signify stability, regulatory clarity, and fiat equivalence on a pan-continental level.

The increasing momentum from major economic powers adds pressure. With China’s digital yuan in active trials and the U.K. contemplating a potential digital pound, Europe seems to be the last major financial hub yet to make concrete progress in launching a digital fiat currency of its own.

Outlook: Keeping the Euro Competitive in a Digitizing World

Despite the rising stakes, the ECB remains noncommittal on the final structure of the digital euro. In a statement to the Financial Times, the bank confirmed it continues to assess both centralized and decentralized technologies. This leaves open the prospect that the eventual euro CBDC might indeed be blockchain-enabled.

What’s clear is that the recent U.S. legislative push has reignited the conversation in Europe. With monetary sovereignty and global payment competitiveness on the line, the EU cannot afford to fall behind.

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Read more: ECB Says U.S.-Backed Stablecoin Use in EU Could Weaken Its Monetary Autonomy