Denis Beau, the first deputy governor of the Banque de France, has warned that the recent executive order from the Trump administration promoting dollar-backed stablecoins could significantly adversely affect Europe’s financial independence. He stressed the urgent need for Europe to accelerate the development of a digital euro to protect its monetary sovereignty.
The executive order, signed by U.S. President Donald Trump in late January, prohibits any efforts to develop a new central bank digital currency while endorsing the growth of dollar-backed stablecoins and encouraging the use of public blockchains by both citizens and businesses. Beau cautioned that private, non-European alternatives might dominate tokenized finance without a central bank-backed payment solution, threatening the euro’s stability.
“If the tokenization of financial assets were to gain momentum, the absence of a central bank-backed payment solution in euros could undermine the role of central bank money as the cornerstone of the euro area’s monetary system,”
Beau stated, outlining the potential consequences. He also linked this development to increased counterparty and liquidity risks, greater fragmentation in settlement systems, and, ultimately, a “loss of sovereignty” that could destabilize Europe’s financial framework.
Furthermore, Beau underscored that Trump’s new direction “reinforces the urgency for Europe to protect its monetary sovereignty, which includes developing payment sovereignty.” He also noted that while global payment systems like Apple Pay and Google Pay have made significant inroads in Europe, European payment systems remain fragmented and are gradually losing market share.
This warning is in line with the current tensions between the European Central Bank (ECB) and the European Commission over the resilience of the EU’s new cryptocurrency regulations. Both institutions are questioning whether these regulations can withstand the potential financial volatility that might arise as Trump returns to the U.S. presidency. ECB President Christine Lagarde highlighted the need to revise the MiCA framework, suggesting that EU bodies now recognise the unique risks posed by stablecoins. She pointed out that the evolving threat landscape calls for a more robust and adaptive regulatory response.
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