Bundesbank Chief Advocates Euro Stablecoins for EU Autonomy

Germany’s Central Bank Leader Endorses Stablecoins and CBDCs for European Payments

Joachim Nagel, who serves as the president of Germany’s Deutsche Bundesbank, has voiced strong support for the rollout of a euro-backed central bank digital currency (CBDC) alongside stablecoins denominated in euros specifically designed for payment purposes across the European Union.

During a prepared address delivered at the New Year’s Reception hosted by the American Chamber of Commerce in Frankfurt on Monday, Nagel highlighted that European Union authorities are exerting considerable effort toward launching a retail-oriented CBDC. He further emphasized that stablecoins tied to the euro could play a pivotal role in enhancing Europe’s self-reliance when it comes to payment infrastructures and innovative financial solutions.

Nagel elaborated on the potential advantages, noting, “In particular, a wholesale CBDC would empower financial institutions to execute programmable transactions directly in central bank money.” He added that euro-denominated stablecoins hold significant value because they enable both individuals and businesses to conduct cross-border payments efficiently and at minimal expense.

Context Amid US Regulatory Advances

These comments from the German central bank president arrive several months following the enactment of legislation in the United States, where President Donald Trump approved a comprehensive framework for payment stablecoins. This development could position US dollar-linked stablecoins to compete directly with any forthcoming euro-pegged equivalents. The new US law is slated for complete implementation either 18 months after its signing or 120 days after the finalization of associated regulatory guidelines, whichever comes later.

In his Frankfurt speech, Nagel focused primarily on the upsides of these digital innovations without delving into the potential downsides he had raised just a week earlier during a discussion at the Euro50 Group meeting. There, he had cautioned that an overwhelming dominance by US dollar-denominated stablecoins in the market could critically undermine domestic monetary policies and erode Europe’s monetary sovereignty.

Stablecoin Yields Spark Debate in US Legislative Efforts

Meanwhile, in Washington, policymakers and officials from the White House have been engaging in discussions with stakeholders from both the traditional banking sector and the cryptocurrency industry. These conversations are taking place in anticipation of a possible Senate vote on the CLARITY Act, a proposed piece of legislation aimed at establishing a broad regulatory structure for digital assets.

The CLARITY Act has generated considerable division among leaders in the crypto space and banking establishments, primarily due to uncertainties surrounding its treatment of stablecoin yield mechanisms, which remain unresolved in the current draft of the bill. This ongoing debate underscores the complexities involved in balancing innovation with financial stability as regulators on both sides of the Atlantic grapple with the rise of stablecoins.

Nagel’s endorsement of euro-pegged stablecoins reflects a broader strategic push within the EU to cultivate domestic alternatives to dominant dollar-based digital assets. By promoting these tools, European policymakers aim to safeguard the bloc’s financial independence and foster more efficient, cost-effective payment systems that can rival global competitors.

The Bundesbank president’s vision extends to programmable payments via wholesale CBDCs, which could revolutionize how financial institutions settle transactions securely using central bank reserves. This capability promises not only greater efficiency but also enhanced programmability, allowing for smart contract-like functionalities in traditional finance.

For everyday users and businesses, euro stablecoins offer a practical solution for international transfers, bypassing the high fees and delays often associated with legacy systems like SWIFT. Nagel’s remarks signal growing institutional acceptance of these technologies, potentially paving the way for wider adoption across the continent.

As the EU accelerates its CBDC preparations, the interplay between regional initiatives and global developments, such as the US GENIUS Act, will be crucial. This act, by legitimizing dollar stablecoins, intensifies the urgency for Europe to deploy its own viable options to maintain competitive parity in the evolving digital payments landscape.

Looking ahead, the success of these efforts will depend on coordinated regulatory actions, technological readiness, and public trust. Nagel’s optimistic outlook provides a timely boost, reinforcing the narrative that stablecoins and CBDCs can serve as pillars of a more sovereign and innovative European financial ecosystem.