Europe Eyes Euro-Denominated Stablecoin Revolution

Euro zone finance ministers are set to discuss supporting euro-denominated stablecoins to avoid leaving the growing market to the U.S. Despite a consortium of European banks launching a euro stablecoin, the market remains dominated by U.S. dollar counterparts. Ministers will consider regulatory adjustments to promote euro stablecoins.

In a bid to avoid ceding the burgeoning stablecoin market to the United States, euro zone finance ministers will deliberate on Thursday about endorsing euro-denominated stablecoins, according to a senior official in the euro zone. The global stablecoin market, now valued at approximately $300 billion, is predominantly U.S. dollar-denominated, raising concerns about potential market dominance.

Stablecoins, pegged to regular currencies, are backed by reserves such as the currency itself or other assets. While a consortium of nine European banks, including major players like ING and UniCredit, has launched a euro-denominated stablecoin, these account for only $620 million of the total issuance.

The ministers will evaluate whether their current regulations strike the right balance between mitigating risks and fostering financial innovation, with particular focus on the link to the digital euro. The discussion aims to attract financial authorities' attention and drive future policy adjustments.

(With inputs from agencies.)