Italy warns dollar stablecoins threaten euro’s global role

Italian Economy Minister Giancarlo Giorgetti has raised concerns over the growing influence of dollar-pegged stablecoins, warning they pose a greater threat to the euro’s standing than trade tariffs.

Speaking at an asset management event in Milan, Giorgetti emphasised the need for the European Union (EU) to address the risks posed by these digital currencies.

Giorgetti highlighted the appeal of stablecoins, which are tied to the value of the U.S. dollar, as a low-risk and widely accepted method for cross-border payments.

He noted that these assets allow users to bypass traditional banking systems, making them attractive not only in economies with unstable currencies but also within the eurozone.

“It is easy to foresee their attractiveness for citizens of economies with unstable currencies, but their appeal for people in the eurozone should not be underestimated,” he stated.

The minister criticised the fragmented nature of the EU’s payment infrastructure and called for decisive action to strengthen the euro’s role as an international reference currency.

He also pointed to recent U.S. policy developments, including proposed legislation requiring stablecoins to be backed by U.S. Treasury bonds, as a strategic move to extend dollar dominance globally.

In response to these challenges, Giorgetti praised efforts by the European Central Bank (ECB) to develop a digital euro.

The proposed central bank digital currency would allow EU residents to hold accounts directly with the ECB for online and in-store payments, as well as peer-to-peer transfers.

“The digital euro will be essential to minimise the need for European citizens to resort to foreign solutions for such a basic service as payment,” Giorgetti remarked.

However, European banks have expressed concerns that a digital euro could lead to significant outflows of customer deposits into ECB-controlled wallets, potentially impacting their liquidity and profitability.