Stablecoins emerged to solve one of the earliest practical problems in crypto markets: volatility.
Stablecoins introduced a simple proposition: combine the speed and programmability of blockchain-
based assets with the relative stability of traditional currencies.

Most stablecoins are designed to maintain a fixed value against a fiat currency, usually the US dollar,
by holding reserves in cash, bank deposits, or short-term government securities. What began as a
bridge between crypto exchanges has gradually evolved into a network for digital assets used for
cross-border transfers, digital commerce, treasury operations, decentralised finance, and the
settlement of tokenised assets. They operate continuously, move across borders quickly, and can be
integrated directly into software-based financial processes.

This evolution matters because money is no longer only being digitised; it is becoming
programmable. The next generation of financial infrastructure will increasingly depend on currencies
that can move through blockchain networks, smart contracts, digital platforms, and automated
commercial systems.

The Digital Dominance of the Dollar and the Strategic Risk for Europe
At present, this emerging infrastructure is overwhelmingly dollar-based. The total stablecoin market
has grown to roughly USD 300 billion in mid-2026, and more than 99 per cent of that value is
denominated in US dollars, with just two issuers, Tether and Circle, accounting for over four-fifths of
total supply. Euro-denominated stablecoins, by contrast, amount to well under EUR 1 billion
combined, a fraction of one per cent of the market. That is not merely a feature of the crypto market
but the digital extension of the dollar's existing role in global finance.

For Europe, the question is therefore strategic: as the infrastructure of the digital economy is built,
will the euro become a native currency within it, or will Europe accept a future in which its digital
transactions increasingly depend on dollar-denominated rails?

The dominance of dollar-backed stablecoins is often presented as a simple reflection of market
demand. That explanation is only partly correct. Their success is also the result of the dollar's pre-
existing position at the centre of global trade, capital markets, and international finance. Stablecoins
have not created dollar dominance; they have transferred it into a new technological environment.
This matters because financial influence increasingly depends on infrastructure. The currency that
becomes embedded in wallets, exchanges, payment applications, smart contracts, and tokenised
markets gains an advantage that is difficult to reverse. Once businesses begin pricing digital assets in
dollars, holding dollar-linked liquidity, and settling transactions through dollar-based networks, the
choice becomes self-reinforcing. Liquidity attracts users, users attract developers, and developers
build more products around the same currency.

Europe therefore faces a deeper risk than simply having fewer euro-denominated crypto assets.
European companies may increasingly rely on dollar-based instruments for digital commerce,
treasury management, and cross-border settlement. European investors may access tokenised
markets through dollar liquidity. European fintechs may build products on infrastructure whose
monetary foundation is controlled elsewhere. Over time, this can create a form of strategic
dependence.

There is also a balance-sheet dimension. Many major stablecoin issuers hold a significant share of
their reserves in short-term US government securities and other dollar-denominated assets. As
stablecoin adoption grows, so does the demand for those instruments. In that sense, digital
dollarisation can strengthen not only the international use of the dollar but also the financial
ecosystem that supports it.

For Europe, monetary sovereignty can no longer be understood only through interest rates, bank
supervision, or the issuance of physical currency. It must also be understood through the design of
digital networks. A currency that is absent from the infrastructure of future commerce may remain
important in traditional markets while gradually losing relevance in the systems where new
economic activity is created.

The real question is not whether the euro will continue to exist as a major currency. It will. The
question is whether it will remain operationally relevant in a world where value moves through
programmable, always-on, borderless financial networks.

The Opportunities Euro Stablecoins Could Create for Europe
The case for euro stablecoins should not be framed only as a defensive response to dollar
dominance. Their more important value lies in what they could enable: faster payments, more
efficient settlement, new forms of financial automation, and a stronger foundation for European
digital commerce.

The most immediate opportunity is in cross-border payments. Despite major improvements in
European payment infrastructure, international transfers can still be slow, fragmented, and
expensive, particularly when they involve multiple banks, currencies, or jurisdictions. A well-
regulated euro stablecoin could allow value to move continuously, including outside traditional
banking hours, while reducing the number of intermediaries involved in settlement. For exporters,
SMEs, digital platforms, and internationally distributed workforces, that could translate into lower
costs and better liquidity management.

The second opportunity is programmability. Traditional money moves through financial systems, but
programmable money can interact directly with software. Payments can be triggered automatically
when contractual conditions are met. Suppliers can be paid when goods are delivered. Revenue can
be split instantly between multiple parties. Treasury rules can be embedded into digital workflows.
This is not simply a faster version of existing banking. It is a different operating model for commerce.

Euro stablecoins could also become an essential liquidity layer for tokenised capital markets. As
bonds, funds, deposits, and other financial instruments move onto distributed ledgers, market
participants will need a reliable euro-denominated settlement asset. Without one, euro-based
financial products may still end up depending on dollar liquidity, even when the underlying issuer,
investor, and transaction are European.

There is also an industrial policy dimension. European banks and fintechs need common
infrastructure on which they can build payment, treasury, lending, and investment products. A
trusted euro stablecoin ecosystem could give them the foundation to develop services that are
scalable beyond national markets.
Europe does not merely need another digital representation of the euro. It needs a usable, liquid,
interoperable euro layer that businesses can integrate into real commercial activity. Regulation can
create trust, but only adoption creates relevance. The opportunity is therefore not to launch a
stablecoin for its own sake, but to make the euro functional in the next generation of financial
infrastructure.

MiCA, Banks, and the Question of Trust: Is Regulation Enough?
So far, Europe has approached stablecoins as it does most financial innovation: by putting regulation
first. The Markets in Crypto-Assets Regulation, better known as MiCA, creates a common framework
for issuance, reserve management, redemption, disclosure, and supervision across the European
Union. This is an important achievement. In a market where trust depends on the quality of the
assets behind a token, clear rules are not optional.

The framework is already producing a regulated market. By mid-2026, eight MiCA-compliant euro
stablecoins were in circulation, led by Circle's EURC and Societe Generale-FORGE's EURCV, with
newer entrants from banks and licensed e-money institutions widening the field. Their combined
market capitalisation more than doubled over the past year. Yet the absolute numbers remain
modest: the entire regulated euro stablecoin segment is still smaller than a single day's trading in
the leading dollar tokens. Compliance is growing; scale is not yet following.

For euro stablecoins to gain broad adoption, users must know that reserves are liquid, segregated,
properly custodied, and available upon redemption. They must also have confidence that issuers are
transparent, operationally resilient, and subject to meaningful oversight. MiCA addresses many of
these concerns and gives Europe something that other markets have often lacked: regulatory clarity.
But clarity alone does not create scale.

A stablecoin can be fully compliant and still fail commercially. It needs deep liquidity, broad
distribution, integration with exchanges and payment platforms, trusted banking relationships, and a
compelling reason for businesses to use it. These are not legal questions. They are questions of
product design, infrastructure, incentives, and market coordination.

Banks will have a central role to play. They provide access to payment systems, liquidity, custody,
compliance capabilities, and corporate clients. Fintechs, meanwhile, are often better positioned to
build user-friendly products, move quickly, and develop new use cases. Europe should therefore
avoid turning the debate into a choice between banks and fintechs. The strongest model will likely
combine the trust and balance-sheet strength of regulated institutions with the speed and
distribution capabilities of technology companies.

There is also a risk that excessive caution could undermine Europe's own ambitions. If issuing,
distributing, or integrating a euro stablecoin becomes too costly or operationally complex,
innovation will move elsewhere. European users may still adopt stablecoins, but they will adopt
products built outside Europe and denominated in dollars.

Europe may be ahead in regulation, but regulation is only the starting point. The real measure of
success will be whether European institutions can turn legal certainty into products that people and
businesses actually choose to use.

Digital Euro and Euro Stablecoins: Competitors or Complements?
The debate around Europe's digital monetary future is often framed as a choice between the digital
euro and privately issued euro stablecoins. That is the wrong starting point. These instruments are
designed for different purposes, operate under different forms of governance, and could play
complementary roles in the financial system.

A digital euro would be central bank money: a direct liability of the European Central Bank and, in
principle, the safest form of digital settlement available to the public. Its primary value would be
trust, stability, and broad accessibility. It could strengthen the public foundation of Europe's
payment system and ensure that citizens continue to have access to sovereign money as payments
become increasingly digital.

Euro stablecoins, by contrast, are likely to be more flexible in commercial settings. Private issuers
can integrate them into exchanges, payment applications, treasury platforms, smart contracts, and
tokenised financial markets. They can move faster in product development, serve specific industries,
and build distribution through partnerships with banks, fintechs, and digital platforms.

This difference does not make the two models incompatible. A well-designed digital euro could
provide the trusted public anchor, while regulated euro stablecoins could form the innovation and
distribution layer around it. One would protect the monetary base; the other would extend the euro
into new commercial environments.

The future of money is likely to be multi-layered. Central bank money, commercial bank deposits,
tokenised deposits, and stablecoins may coexist, each serving different needs.
Treating the digital euro and euro stablecoins as rivals would narrow Europe's options at precisely
the moment when it needs more of them. The strategic objective should not be to select a single

winner, but to build a coherent digital monetary system in which public trust and private innovation
reinforce one another.

What Europe Must Do to Protect Its Monetary Sovereignty
Protecting monetary sovereignty will require more than launching a digital euro or approving a
handful of compliant stablecoins. Europe needs scale, liquidity, distribution, and practical use cases.
Banks, fintechs, payment institutions, corporates, and public authorities must work together to
create shared infrastructure rather than isolated national solutions.

The first priority should be adoption in the real economy. Euro stablecoins need to move beyond
crypto trading and into e-commerce, cross-border trade, treasury management, supplier payments,
and tokenised capital markets. Without meaningful commercial use, even the most carefully
designed product will remain marginal.

The second priority is interoperability. A fragmented ecosystem of incompatible wallets, settlement
networks, and national platforms would reproduce the inefficiencies Europe is trying to solve.
Common standards for reserves, redemption, compliance, and technical integration will be essential.
Europe must also think beyond its own borders. The euro will only strengthen its international role if
it becomes useful in digital payment corridors connecting Europe with neighbouring markets, trade
partners, and emerging economies. Monetary influence follows usage.

My view is clear: Europe has spent too much time asking how to control digital finance and not
enough time asking how to lead it. Regulation is necessary, but it is not a strategy. A strategy creates
adoption, incentives, infrastructure, and global relevance.

The real challenge is whether Europe will shape the next generation of financial infrastructure or
merely regulate systems designed elsewhere.

Euro stablecoins are not the entire answer, but they are a critical part of it. If Europe fails to build
scale now, it risks becoming a rule-maker in a financial system whose most important networks are
denominated in someone else’s currency.