A consortium of nine European banks, including ING and UniCredit, announced on Thursday their plan to form a new company to launch a euro-denominated stablecoin. This move aims to counter the dominance of the U.S. in the digital market.
Several top U.S. financial firms are preparing to introduce their own dollar-backed crypto tokens following President Donald Trump’s signing of a law governing stablecoin regulations, which could further reinforce U.S. hegemony.
The use of stablecoins, designed to maintain a constant value and backed by traditional currencies, has surged in recent years. They are especially popular among crypto traders transferring funds to and from more volatile tokens. Additionally, stablecoins are utilized in mainstream digital payments and cross-border transactions.
The new company, based in Amsterdam, is expected to launch its stablecoin in the second half of next year.
US stablecoin dominance, ECB remains skeptical
While global stablecoin issuance is nearly $300 billion, euro-denominated stablecoins account for only $620 million, according to data released last week by the Bank of Italy. Dollar-pegged tokens are overwhelmingly dominant.
“The initiative will provide a real European alternative to the U.S.-dominated stablecoin market, contributing to Europe’s strategic autonomy in payments,” the banks stated.
They initiated this effort to create a token that can be used for quick, low-cost payments and settlements, even as the European Central Bank (ECB) expresses skepticism over stablecoins.
ECB President Christine Lagarde indicated in June that privately issued stablecoins pose risks to monetary policy and financial stability. As a safer alternative, she has urged European lawmakers to draft legislation supporting the launch of a digital version of the EU’s single currency.
Some commercial banks, however, have resisted the introduction of a digital euro, fearing that it would deplete their funds as customers move cash from banks to the safety of an ECB-guaranteed wallet.
In addition to ING and UniCredit, other banks participating in the new company include Banca Sella, KBC, DekaBank, Danske Bank, SEB, Caixabank, and Raiffeisen Bank International.
They mentioned that more participants could join the initiative, and a CEO for the company would be appointed soon.
A recent report by Deutsche Bank highlighted that emerging market economies, in particular, are adopting dollar-based stablecoins to replace local deposits and cash.
“This has created a global monetary dilemma: countries should adopt stablecoins or risk being left behind. Europe is under particular pressure,” the report stated.
Societe Generale’s crypto arm, SG-FORGE, launched a euro-based stablecoin in 2023, although it has not seen wide adoption, with only 56.2 million euros ($66 million) in circulation, according to its website. The French bank also launched a U.S.-dollar stablecoin earlier this year.
