The chief economist of the European Central Bank (ECB), Philip Lane, said that Europe needs a digital euro to counter the presence that the stablescoins linked to a dollar and American electronic payment systems gain in the region’s financial system.
The prevalence of electronic payments provided by large technological companies, such as Apple Pay, Google Pay and Paypal, “exposes Europe to the risks of economic pressure and coercion,” said Lane, according to the text of a discourse to the University College of Cork in Ireland on Thursday.
“The digital euro would provide a secure digital payment option and universally accepted under European governance, reducing dependence on foreign providers,” said Lane. “The availability of the digital euro would also limit the probability of stablescoins on a foreign level which will take foot as a means of exchange in the euro zone.”
Lane pointed out that 99% of the Stablescoin market is made up of tokens fixed to the US dollar. This raises the possibility that stablescoins in dollars gain ground in the euro zone and the payment systems become “directly or indirectly anchored by the dollar rather than by the euro”.
The ECB, such as central banks of other developed economies from around the world, explores the possibility of introducing a digital currency from the Central Bank (CBDC). Tackling the competition posed by the stablescoins and the payment services managed by the company are often among the reasons mentioned to do so.
The case for a CBDC can be more important, especially for the ECB, since the euro zone includes several countries, said Lane. The single currency is used in 20 Member States of the European Union, and the euro zone does not have a unified payment system due to various standards inherited from one country to another.
“The digital euro presents a unique opportunity to overcome the persistent fragmentation in retail payment systems in the euro zone,” he said.
