On Thursday, nine European banks, including ING and UniCredit, announced their plan to form a new company aimed at launching a stablecoin pegged to the euro. This initiative seeks to challenge the dominance of U.S. digital markets.
U.S. financial giants are gearing up to introduce their own dollar-backed crypto tokens following a law signed by President Donald Trump, which further strengthens their market leadership.
Stablecoins, which are designed to maintain a consistent value and are backed by traditional currencies, have surged in popularity, particularly among crypto traders navigating volatile tokens. They are also gaining traction in mainstream digital payments and international transactions.
The new company, based in Amsterdam, is slated to release its stablecoin in the latter half of next year.
US Stablecoin Dominance; ECB’s Reservations
Currently, global stablecoin issuance approaches $300 billion, while euro-denominated stablecoins stand at a mere $620 million, according to the Bank of Italy. Dollar-linked tokens dominate the market.
The banks stated, “This initiative will offer a genuine European alternative to the U.S.-led stablecoin market, enhancing Europe’s strategic autonomy in payments.”
The project aims to create a token for swift, low-cost transactions and settlements, despite the European Central Bank’s skepticism about stablecoins.
In June, ECB President Christine Lagarde warned European policymakers about the risks privately issued stablecoins pose to monetary policy and financial stability. She advocated for legislation to support a digital version of the EU’s currency as a safer alternative.
Some commercial banks have opposed a digital euro, fearing it might deplete their reserves as customers move funds to ECB-backed wallets.
Besides ING and UniCredit, participating banks include Banca Sella, KBC, DekaBank, Danske Bank, SEB, Caixabank, and Raiffeisen Bank International. They mentioned the possibility of more banks joining and that a CEO would be appointed soon.
A Deutsche Bank report recently emphasized that emerging markets are increasingly adopting dollar-based stablecoins as alternatives to local deposits, creating a global monetary challenge. Europe faces particular pressure in this regard.
In 2023, Societe Generale’s crypto division, SG-FORGE, launched a euro-based stablecoin, though its adoption has been limited, with only 56.2 million euros ($66 million) in circulation. The French bank also rolled out a U.S. dollar stablecoin earlier this year.
