Stablecoins are experiencing rapid growth. The majority of the $255 billion sector is currently concentrated in U.S. dollar-backed tokens, which make up $241 billion of that total, according to RialCenter data.
Lorenzo Bini Smaghi, a former board member of the European Central Bank and chair of Société Générale, has stated that this imbalance might push Europe to the sidelines in the upcoming phase of global finance.
Writing in the Financial Times, Bini Smaghi pointed out that the European Union has already implemented the Markets in Crypto-Assets (MiCA) law, which requires issuers to back tokens with cash and high-grade sovereign bonds.
Nevertheless, the euro barely appears in today’s stablecoin market because banks and policymakers hesitate to embrace new technology, he noted.
Additionally, Société Générale launched its own euro-backed stablecoin in 2023. Last month, it also introduced a U.S. dollar-backed version.
Bini Smaghi warns that this reluctance poses a threat to European monetary sovereignty. If consumers and businesses favor dollar stablecoins for everyday transactions and savings, deposits could shift from euro-area banks to U.S.-associated platforms.
This transition would diminish the ECB’s control over money flows and hinder its ability to influence rates or stabilize markets, he added. He argues that regulators should embrace progress instead of resisting it.
By endorsing euro-pegged tokens and coordinating standards, the ECB could modernize cross-border payments and aid in unifying Europe’s capital markets.
If Europe remains inactive, “it will be accepting its marginalization in the future of global finance,” he warned.
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