ECB pitches digital euro as response to Trump’s | finance news
FRANKFURT (Reuters) – Euro zone banks need a digital euro to reply to U.S. President Donald Trump’s push to advertise stablecoins, a kind of cryptocurrency sometimes pegged to the U.S. greenback, European Central Financial institution board member Piero Cipollone mentioned on Friday.
Trump mentioned he would “promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide” as half of a broader crypto strategy that he sketched out in an government order issued on Thursday.
Cipollone mentioned this could help lure even more clients away from banks and strengthen the case for the ECB to launch its own digital currency in response.
“I guess the key word here (in Trump’s executive order) is worldwide,” Cipollone advised a convention in Frankfurt. “This solution, you all know, further disintermediates banks as they lose fees, they lose clients…That’s why we need a digital euro.”
Stablecoins work equally to money market funds in that they offer publicity to short-term rates of interest in an official currency – practically all the time the U.S. greenback.
A digital euro, in contrast, would primarily be an online pockets assured by the ECB however operated by firms similar to banks.
It will permit people, even those that do not have a bank account, to make funds. Holdings would possible be capped at a few thousand euros and never remunerated.
Banks have expressed issues that a digital euro would empty their coffers as clients switch some of their money to the protection of an ECB-guaranteed pockets.
The euro zone’s central bank is presently experimenting with how a digital euro would work in apply. However it can solely make a closing choice on whether or not to launch it as soon as European lawmakers approve laws on the matter.
Trump’s government order additionally prohibited the Federal Reserve from issuing its own central bank digital currency (CBDC).
Nigeria, Jamaica and the Bahamas have already launched digital currencies and a additional 44 nations, together with Russia, China, Australia and Brazil are operating pilots, in keeping with the Atlantic Council suppose tank.
(Reporting By Francesco Canepa; enhancing by Mark Heinrich)
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