Europe Urged to Adopt Euro-Denominated Stablecoins to Counter U.S. Dominance

Former European Central Bank executive Lorenzo Bini Smaghi has issued a stark warning about Europe's lagging position in the digital currency race. With 99% of stablecoins currently pegged to the U.S. dollar, the euro remains conspicuously absent from this critical financial innovation.

The Markets in Crypto-Assets (MiCA) regulation framework has failed to stimulate meaningful euro-based stablecoin development. Smaghi argues that regulatory overcaution is creating a vacuum where Europe risks permanent irrelevance in tokenized finance. "The window for action is closing," his Financial Times op-ed suggests, pointing to Societe Generale's blockchain experiments as potential models.

Market data reveals a troubling asymmetry. While dollar-pegged stablecoins facilitate trillions in annual transactions, euro equivalents account for less than 1% of stablecoin reserves. This imbalance leaves European institutions dependent on dollar-based infrastructure for blockchain settlements and DeFi applications.