Germany’s Bundesbank boss sees stablecoins and CBDCs as an opportunity for Europe’s digital sovereignty
Nagel warns of the growing dominance of the US dollar in digital payment transactions
The President of the German Bundesbank, Joachim Nagel, took an unusually clear position in favor of digital currencies at the New Year’s reception of the American Chamber of Commerce in Frankfurt. In his speech, he emphasized that both euro-denominated stablecoins and a digital euro are crucial building blocks for securing Europe’s monetary sovereignty in the digital age. The background to his statements is the rapidly growing dominance of US dollar stablecoins, which now clearly dominate the global market and thus also increase geopolitical dependencies.
Nagel pointed out that the US has already created a structured framework for stablecoins with new regulatory initiatives such as the GENIUS Act. Europe, on the other hand, is still in the implementation phase of MiCA. Without its own digital alternatives, the EU is threatened with “digital dollarization,” which could also impair its ability to manage monetary policy in the long term.
Wholesale CBDC as infrastructure for the financial sector
Nagel was particularly clear on the topic of wholesale CBDC, i.e. a digital central bank currency for financial institutions. He sees this as a technological advance that can make the processing of securities transactions more efficient, safer and more cost-effective. Programmable payments, immediate settlement and lower operational risks are key advantages that Europe urgently needs in international competition. The Bundesbank is already testing various prototypes that could be integrated into the European market infrastructure in the future.
Euro stablecoins as a supplement to the digital euro
Nagel made it clear that privately issued, strictly regulated euro-denominated stablecoins should not be seen as competition, but rather as a complement to the digital euro. They could bring significant efficiency gains, particularly in cross-border payment transactions. This opens up new opportunities for companies and consumers to process international transactions faster and cheaper. What is crucial, however, is that these stablecoins are fully backed by secure reserves and are under European supervision.
Europe is under pressure to act
The Bundesbank President’s speech is a signal that the tone in the European debate is noticeably tightening. While the US and parts of Asia are already pushing ahead with their digital currency projects, Europe is at risk of falling behind. Nagel’s appeal can therefore be understood as a request not to postpone the modernization of European payment transactions any longer. With MiCA, the digital euro and a clear regulatory framework for euro-based stablecoins, the EU could strengthen its position in the global financial system while securing its economic independence.
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