HomeBusinessThe ECB presents the digital euro in response to Trump's cryptopush

The ECB presents the digital euro in response to Trump’s cryptopush

Frankfurt (Reuters) – Banks in the euro zone need a digital euro to respond to the pressure of US President Donald Trump to promote Stablecoins, a kind of cryptocurrency that is usually linked to the US dollar, said Piero Cipollone, board member of the European Central Bank, Friday.

Trump said that he would “promote the development and growth of legal and legitimate, Stablecoins supported by Dollars worldwide” as part of a broader crypto strategy that he sketched in an executive order on Thursday.

Cipollone said this would help to lure even more customers away from the banks and strengthen the arguments for the ECB to launch their own digital currency in response.

“I think the keyword here (in the executive order of Trump) is worldwide,” said Cipollone at a conference in Frankfurt. “You all know that this solution makes the banks further disintermediary because they lose costs and customers. That’s why we need a digital euro. “

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Stablecoins work in the same way as money market funds, in the sense that they offer exposure to short -term interest rates in an official currency – almost always the US dollar.

A digital euro, on the other hand, would essentially be an online wallet that is guaranteed by the ECB, but is managed by companies such as banks.

It would enable people, even those who do not have a bank account, to make payments. The possession would probably be limited to a few thousand euros and not be reimbursed.

Banks have expressed concern that a digital euro would empty their treasury if customers transfer part of their cash to the safety of a wallet guaranteed by the ECB.

The central bank of the eurozone is currently experimenting with how a digital euro would work in practice. But it will only make a final decision on whether or not to launch it as soon as European legislators approve the legislation in this regard.

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The executive command of Trump also forbade the Federal Reserve to publish its own digital currency of the Central Bank (CBDC).

Nigeria, Jamaica and the Bahamas have already launched digital currency and another 44 countries, including Russia, China, Australia and Brazil, carry out pilots, according to the think tank of the Atlantic Council.

(Reporting by Francesco Canepa; Editors by Mark Heinrich)

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