Joachim Nagel, President of Germany's central bank, the Deutsche Bundesbank, has publicly endorsed the development of a euro-pegged central bank digital currency (CBDC) and euro-denominated stablecoins. In prepared remarks for a speech in Frankfurt, Nagel stated that EU officials are "working hard" toward the introduction of a retail CBDC. He highlighted that a wholesale CBDC would enable financial institutions to make programmable payments in central bank money.
Nagel emphasized the strategic benefits of euro-denominated stablecoins, arguing they could "make Europe more independent in terms of payment systems and solutions." He noted their utility for low-cost cross-border payments for both individuals and firms. This endorsement comes in the context of the U.S. advancing its own regulatory framework for payment stablecoins, a move that could position dollar-pegged stablecoins to challenge any future euro-based alternatives.
However, Nagel also issued a warning, echoing concerns raised at a recent Euro50 Group meeting. He cautioned that if U.S. dollar-denominated stablecoins achieve a significantly larger market share in Europe than a euro-pegged coin, it could "severely impair" domestic monetary policy and weaken European sovereignty.
The remarks align with the broader regulatory landscape shaped by the EU's Markets in Crypto-Assets (MiCA) regulation. Under MiCA, euro-denominated stablecoins are expected to track the euro, be backed by transparent reserves, and allow full redemption at par. ECB officials, including Governing Council member Olaf Sleijpen, have warned that the rapid growth of stablecoins could push them toward systemic relevance, where a mass redemption event might force monetary-policy adjustments, underscoring the need for rigorous supervision of liquidity and reserve quality.
