https://arab.news/nf42b
Could central banks become obsolete? This is one of the questions being asked across Europe as digital payments take over from cash. Could a private platform issue a stablecoin that achieves mass adoption in everyday commerce? It may sound like science fiction but, as economic pressures mount across the countries of Europe, especially with high sovereign debt levels in leading EU countries and talk of systemic risks, the legitimacy of state currencies is weakening. And as we have often seen in times of crises, trust could shift rapidly from public money to private alternatives.
EU discussions on the issuance of a digital euro were shaken last month by the US’ passage of the GENIUS Act. This new law propels America into the age of decentralized finance, as it creates a regulatory framework for the $288 billion stablecoin market that is dominated by dollar-backed tokens like Tether and Circle’s USDC. The combination of high European debt, slowing growth and the rise of private digital money has forced European policymakers to speed up their plans for a digital euro.
Indeed, there are now fears that dollar-pegged stablecoins could take a bigger share of cross-border payments, taking deposits away from Europe. The European Central Bank has presented the digital euro as a public alternative to private payment networks, but there is now clear US momentum that has changed everything. It is also worth noting that China has already launched large-scale pilots for the digital yuan and the UK is pushing ahead with its digital pound. If all the alternatives rely on a deposit of the equivalent fiat currency, mass adoption within a single system could allow for it to be unlinked, just as the US dollar stopped being pegged to gold in 1971.
