European policymakers are stepping up efforts to defend monetary autonomy, with euro stablecoins increasingly seen as a central pillar of that strategy.
Bundesbank steps up support for euro-denominated stable assets
Germany’s central bank, the Deutsche Bundesbank, has reinforced its backing for euro stablecoins as European authorities confront the growing dominance of dollar-linked digital tokens. Officials signaled that these instruments could help preserve eurozone monetary control while supporting innovation in payments.
The Bundesbank set out plans to advance the digital euro alongside strictly regulated private tokens. It argued that euro-based stable assets can boost cross-border payment efficiency and cut dependence on foreign payment networks. Consequently, policymakers framed these projects as components of a wider financial sovereignty agenda for the European Union.
Bundesbank President Joachim Nagel reiterated his support for both retail and wholesale central bank digital currency. He said a wholesale CBDC could enable programmable settlement in central bank money for financial institutions. Moreover, he linked privately issued euro-pegged tokens with stronger competitiveness in financial technology, clearing and settlement services across the bloc.
Nagel also highlighted ongoing exploratory work within the Eurosystem on wholesale CBDC architectures. Under these designs, banks and other financial institutions could process automated transactions in a secure and resilient environment. At the same time, he argued that well-regulated euro-based stable assets can offer cost-efficient payment and savings tools for companies and households.
ECB warns on dollar-linked dominance and policy transmission
The European Central Bank has raised the alarm over the expanding market share of dollar-backed stablecoins in global crypto markets. Officials cautioned that heavy reliance on such foreign-currency instruments may weaken the effectiveness of euro area monetary policy transmission. Therefore, they stressed the strategic value of domestically anchored solutions.
ECB representatives warned that what they described as digital dollarization could gradually erode financial autonomy in member states. They argued that a fully fledged digital euro CBDC initiative would bolster resilience in core payment infrastructure. In addition, they insisted that any privately issued euro-pegged tokens must be tightly integrated into the broader monetary and regulatory framework.
At the same time, the ECB underlined that unmanaged growth in dollar-pegged crypto assets might heighten currency substitution risks. This trend could complicate liquidity management for banks and central banks. However, officials suggested that a robust domestic framework for stable assets, including CBDC and compliant private tokens, could mitigate these challenges over the medium term.
German Finance Minister Lars Klingbeil urged faster coordination within Europe on financial and capital market integration. He argued that the European Union needs to move beyond narrow national priorities to reinforce its sovereignty and strategic autonomy. Furthermore, he described the current period as decisive for advancing shared financial infrastructure and deepening the single market.
Market projections point to rapid euro stablecoin growth
S&P Global Ratings has projected significant expansion for euro-denominated digital assets in the coming years. The credit rating agency estimated that the euro stablecoin market could scale to about €1.1 trillion by 2030 under favorable regulatory and adoption conditions. However, its baseline forecast remains more conservative, at roughly €570 billion by the same date.
S&P noted that euro-based tokens represented only around €650 million at the end of last year, highlighting how early the market still is. It added that potential growth could eventually represent more than four percent of overnight bank deposits in the euro area. Moreover, such a shift would mark a structural change in how savings and transactional balances are held across the region.
By contrast, U.S. dollar-pegged stable assets had reached an aggregate valuation of about $310 billion by late 2025. This scale underscores the current dominance of greenback-linked tokens and reinforces ECB concerns about overreliance on foreign currency instruments. That said, analysts argue that clear rules and credible public-sector backing could narrow this gap for euro-linked alternatives.
In the United States, lawmakers advanced federal oversight for digital assets after President Donald Trump signed the GENIUS Act in July 2025. The law marked a milestone for stablecoin supervision, although disagreements over detailed market structure rules have since slowed additional progress in Congress. Meanwhile, European authorities continue to present euro stablecoins as a cornerstone of long-term monetary and financial sovereignty, aligning them with the EU’s broader regulatory and integration agenda.
Overall, the combined push from the Bundesbank, the ECB and EU policymakers signals a clear direction: develop a digital euro, promote regulated euro-linked stable assets and curb excessive dependence on foreign currency tokens, in order to strengthen the euro area’s financial resilience and strategic autonomy.
Source: https://en.cryptonomist.ch/2026/02/17/euro-stablecoins-sovereignty/
