Stablecoins – the most frequently used type of digital money that’s based on an asset like the US dollar – have changed global banking. Having finally reached the ears of the European Union, US dollar-backed stablecoins make up 97% of the $215 billion global stablecoin market, gaining strategic independence as well as financial reliance.
Why the EU Thinks Dollar Dominance Is So Scary
The European Central Bank has stressed that the biggest risk facing Europe is its reliance on finance institutions anchored in the United States. More than 60% of card payments in the European Union are processed by foreign networks controlled by U.S Businesses.
This would mean an independent, safe digital payment system should be established. For example, mobile app payments in the EU grew from 1% of retail transactions in 2019 to 9% in 2024. Stablecoins with dollar backing will further entrench US dollar hegemony and restrain the financial freedom of Europe.
🇪🇺 EU concerned about US dollar-pegged stablecoin dominance, advocates for digital euro development.
— Swisstronik 🇨🇠(@swisstronik) February 5, 2025
Our take: The EU is strategizing its game plan with a digital euro to stand tall against US financial dominance. It's a strategic play – let's see who will be proven right!…
Digital Euro: Europe Acts
To achieve this, the ECB is hastening the pace of the development of the digital euro. A CBDC would give Europeans access to central bank money in a digital form and reduce dependence on foreign systems. The digital euro is a vital step toward securing the EU’s financial sovereignty and maintaining its banks’ role in the economy.
Trump’s Stablecoin Strategy and Its Impact
Former US President Donald Trump’s executive order on digital financial leadership has increased EU apprehensions. It bars the creation of any CBDCs in the US and promotes dollar-backed stablecoins in a fashion that will help to augment the dominance of the US dollar. This reflects the priority for America in preserving its monetary hegemony, putting a question whether this will affect international CBDC projects.
Securing Europe’s Financial Future
The EU is committed to the development of the digital euro to reduce its dependence on US systems and reverse dollar dominance. A strong, widely adopted digital euro is an important factor for Europe’s economic independence and leadership in digital finance. By putting innovation and sovereignty at the center, the EU is shaping the future of global money.
