Market News

German Central Bank Eyes Euro-Pegged Stablecoin to Enhance Cross-Border Transactions

Joachim Nagel, President of the German Central Bank, has announced plans for a euro-pegged stablecoin aimed at revolutionizing cross-border payments.

He highlighted that such a stablecoin could significantly lower costs and provide a swift payment solution for both individuals and businesses.

Nagel warned against the threats of “dollarization,” where local economies shift towards dollar-denominated stablecoins, undermining monetary policy and economic sovereignty in Europe.

As part of the European Central Bank’s (ECB) initiatives, Nagel mentioned exploring distributed ledger technology (DLT) for financial instruments beyond central bank money.

Options under consideration include tokenized deposits and euro stablecoins, showcasing Europe’s proactive approach towards digital finance.

He also referenced the ECB’s ongoing digital euro project, which is set to launch in 2029, highlighting its potential impact on the financial landscape.

Additionally, the ECB is developing a “wholesale” CBDC to facilitate programmable transactions among financial institutions.

These developments occur as Europe intensifies its efforts to seek alternatives to dollar-focused digital solutions.

Nagel's remarks indicate a significant shift in European monetary policy towards embracing fintech innovations and reducing dependency on the US dollar.

The proposed euro-pegged stablecoin could play a crucial role in ensuring the stability and sovereignty of the European monetary system.