European officials are exploring the potential for a digital euro on public blockchains like Ethereum or Solana, a significant shift from earlier plans for a central, closed system. This discussion has gained urgency following the U.S. passing its stablecoin law in July, which affects Europe’s competitive position in global finance. Experts argue that deploying the euro on a public chain would enhance its global reach, integrating it seamlessly into decentralized finance (DeFi) and cross-border payments without requiring new infrastructure. However, privacy concerns related to the EU’s GDPR and technical challenges related to blockchain scalability and governance remain critical issues that policymakers must address. There are worries that a widely accessible euro token could destabilize banks if not designed properly. In light of U.S. moves to promote stablecoins, European Central Bank officials stress the necessity of advancing the digital euro to maintain financial stability and strategic autonomy in the face of competition from the dollar.

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