Europe Must Adopt Stablecoins Now—Or Lose to U.S. Digital Currency Dominance, Warns Lorenzo Smaghi

Stablecoins aren’t just crypto’s boring cousins—they’re the Trojan horse for financial sovereignty. And Europe’s dawdling while the U.S. races ahead.

The Digital Dollar Dilemma

Washington’s grip on global finance tightens with every CBDC pilot. Meanwhile, Brussels debates regulatory nuances like a committee planning a space mission with quill pens. Smaghi’s warning? Adapt or become a monetary colony.

Euro-Stablecoins: Too Little, Too Late?

Private euro-pegged tokens exist—but lack the scale to matter. Without state backing, they’re glorified casino chips in a game where the Fed holds all the dice. (Cue cynical aside about EU bankers still faxing MiCA drafts.)

The Play: Merge TradFi Muscle With Crypto Agility

Imagine a digital euro that doesn’t require 27 member states to agree on lunch orders. Algorithmic stability mechanisms could bypass political gridlock—if regulators stop conflating innovation with money laundering.

The clock’s ticking. Every delayed decision hands more leverage to the dollar’s digital empire. Will Europe build its own future, or rent it back from Wall Street at 300bps over LIBOR?

TLDR

• Europe lags as 99% of stablecoins stay tied to U.S. dollar
• Bini Smaghi urges EU to act fast on euro-based stablecoins
• MiCA rules fail to boost euro’s stablecoin presence
• EU risks digital finance irrelevance without stablecoin push
• Over-regulation blocks Europe’s role in tokenized future

Europe faces growing pressure to adopt stablecoin strategies, as 99% of global stablecoins are tied to the U.S. dollar. Former European Central Bank board member Lorenzo Bini Smaghi warns of Europe’s declining influence in the digital finance sector. He urges immediate action to integrate stablecoins into Europe’s financial strategy before the region loses competitive ground.

Minimal Euro Role in Global Stablecoin Market

The global stablecoin market remains overwhelmingly dominated by U.S. dollar-denominated assets. The euro’s role in the sector remains minimal and non-influential. This imbalance highlights Europe’s delayed entry into a rapidly growing financial technology space.

Lorenzo Bini Smaghi: Europe must embrace stablecoins

In an opinion piece published by the @FT, @LBiniSmaghi, chairman of French bank Societe Generale and former member of the European Central Bank (ECB) Executive Board, argued that Europe should shake off its fears and embrace…

— CoinNess Global (@CoinnessGL) July 4, 2025

Bini Smaghi identifies this as a missed opportunity that reflects regulatory over-control and a limited appetite for innovation. Although the European Union implemented the MiCA framework, it has not translated into stablecoin growth tied to the euro. He notes that euro-backed stablecoins remain rare due to unclear incentives and regulatory bottlenecks.

Banks in Europe still consider stablecoins as threats rather than tools for future financial growth. This stance prevents integration with broader monetary policy goals and hinders digital payment development. As a result, European financial institutions are falling behind global players embracing tokenized assets.

MiCA Alone Is Not Enough to Lead

The EU introduced MiCA to manage digital assets by requiring stablecoin issuers to hold high-quality reserves. These include 30% in cash and 70% in high-grade sovereign bonds, offering structural control. However, this framework has not yet encouraged significant euro-based stablecoin issuance.

Bini Smaghi argues that over-regulation is damaging the region’s ability to lead digital finance transformation. He believes the European Central Bank should use its authority to balance innovation with financial integrity. A stronger policy stance WOULD also support financial autonomy against U.S. digital asset dominance.

He also notes that treating stablecoins merely as low-tier financial tools is undermining Europe’s chance to shape global standards. Regulatory fear has delayed progress, while other economies rapidly build influence. Without urgent changes, Europe risks being a passive participant in future global financial networks.

Strategic Shift Needed to Avoid Financial Isolation

Smaghi outlines three misjudgments: ignoring the value of tokenization, assuming Europe can avoid global stablecoin impact and overlooking monetary risks. These beliefs prevent bold decision-making in a market moving faster than European institutions can adapt. He warns that financial sovereignty could weaken without a clear euro-linked stablecoin strategy.

Europe must consider stablecoins as part of its economic infrastructure, not just a niche financial product. A revised outlook will allow smoother integration into digital payment systems and reduce dependence on U.S.-based assets. This shift would also ensure that the euro gains relevance in the next stage of financial evolution.