In light of these risks, ESM is urging the ECB to accelerate the development of a digital euro, a sentiment echoed by ECB board member Piero Cipollone.

The European Central Bank (ECB) has consistently warned that reliance on U.S.-backed stablecoins may weaken the euro's standing in international markets.

ECB President Christine Lagarde has reiterated that the central bank will not include Bitcoin in its reserves, emphasizing the need for liquidity, security, and safety in monetary reserves.

During a Eurogroup press conference on March 10, 2025, Pierre Gramegna, managing director of the European Stability Mechanism (ESM), raised concerns about the U.S. stance on cryptocurrencies, particularly dollar-denominated stablecoins, which could threaten the financial stability of the euro area.

The ECB has been actively working on a Central Bank Digital Currency (CBDC) since 2020, prompted by regulatory concerns following Facebook's announcement of its digital currency, Libra.

Gramegna highlighted that the favorable U.S. approach to cryptocurrencies raises the risk of mass payment solutions that could undermine the euro's position in global finance.

Paschal Donohoe, chairman of the euro zone finance ministers, emphasized the urgency of creating a digital euro to ensure currency resilience and protect Europe's strategic autonomy.

Recent regulatory changes in the U.S. allow banks to offer stablecoin services, potentially leading to U.S.-backed stablecoins dominating global transactions.

In contrast, U.S. President Donald Trump has opposed the establishment of a Federal Reserve CBDC, signing an executive order in January 2025 to promote dollar-backed stablecoins instead.

Trump's recent executive order also established a strategic reserve of cryptocurrencies, marking a significant policy shift from the previous administration.

The ECB's efforts include expanding its payment system for inter-institutional transactions to support the digital euro initiative.

The ESM supports the ECB's digital euro project and the European Commission's revision of the Markets in Crypto-Assets (MiCA) directive to reduce reliance on U.S. stablecoins.