ECB’s Lane urges swift adoption of digital euro to counter foreign stablecoins

European Central Bank Chief Economist Philip Lane is sounding the alarm: dollar-pegged stablecoins are getting far too comfortable on European turf. While the euro was at rest, the digital dollar quietly made itself at home in the wallets of European users.

What is the risk? It is more subtle than it seems. If eurozone companies and consumers shift en masse to dollar-denominated stablecoins, the EU’s payments market could fall under the control of the US currency. In this scenario, the euro risks becoming little more than a souvenir for tourists.

Lane warns that Europe's growing flirtation with digital dollars could seriously undermine the ECB's ability to control inflation and steer the economy. In other words, the central bank risks becoming a passive observer, aware of the shifts but unable to intervene.

As Lane puts it, Europe is already heavily reliant on US payment giants such as Visa, Mastercard, PayPal, Apple, and Google. Any abrupt policy change on the other side of the Atlantic could put Europeans in a precarious position.

Lane's solution is both straightforward and forward-looking. He believes that Europe needs to accelerate the introduction of a digital euro. The official argues that a central bank digital currency (CBDC) would not only defend the euro against an American digital incursion but could also unify the EU's fragmented payments landscape.

His concerns are echoed by ECB President Christine Lagarde, who has been urging lawmakers to speed up their efforts so that Europeans can start using a digital euro by October 2025.