Joachim Nagel, the president of Germany’s central bank, the Deutsche Bundesbank, has advocated for the adoption of a euro-pegged central bank digital currency (CBDC) and euro-denominated stablecoins as a means to bolster Europe's payment systems. Speaking at the New Year’s Reception hosted by the American Chamber of Commerce in Frankfurt, Nagel emphasized the efforts of European Union officials to introduce a retail CBDC.
Nagel highlighted the potential advantages of euro-denominated stablecoins, which could enhance Europe's independence in its payment systems by reducing reliance on US dollar-pegged stablecoins. He noted that a wholesale CBDC could facilitate programmable payments in central bank money for financial institutions, while euro-pegged stablecoins might enable low-cost cross-border transactions for both individuals and businesses.
These statements were made in the context of recent legislative developments in the United States, where a new law signed by President Donald Trump aims to establish a framework for payment stablecoins. This law could pave the way for US dollar-pegged stablecoins to potentially compete with any euro-pegged counterparts, with implementation expected within 18 months of its signing or 120 days after related regulations are finalized.
Nagel's comments come amid ongoing discussions in Washington about the CLARITY Act, a proposed bill that seeks to establish a comprehensive regulatory framework for digital assets, including stablecoins. The legislation has sparked debate among industry and banking leaders over its provisions on stablecoin rewards, which remain under consideration.
Previously, at the Euro50 Group meeting, Nagel had expressed concerns about the potential risks posed by US dollar-denominated stablecoins dominating the market. He warned that such a scenario could significantly impact domestic monetary policy and weaken European sovereignty if a euro-pegged alternative does not gain substantial market share.