Trump crypto push could hurt Europe’s financial stability: Top EU official
Finance officials in the European Union are concerned US President Donald Trump’s embrace of digital assets could affect Europe’s monetary sovereignty and financial stability.
“The US administration is favorable toward cryptocurrencies and especially dollar-denominated stablecoins, which may raise certain concerns in Europe,” European Stability Mechanism (ESM) managing director Pierre Gramegna said at a Eurogroup press conference on March 10.
Gramegna cautioned that the US crypto pivot “could eventually reignite foreign and US tech giants’ plans to launch mass payment solutions based on dollar-denominated stablecoin,” adding, “And if this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability.”
The ESM “supports the ECB’s urgency in making the digital euro a reality to safeguard Europe’s strategic autonomy — this digital euro is today more necessary than ever,” he added.
The ESM is an intergovernmental organization established by member states of the euro area, helping countries overcome financial crises and maintain long-term financial stability and prosperity.
Pierre Gramegna speaking on US crypto threat. Source: YouTube
“Policy developments in other jurisdictions can have important consequences for us here in Europe,” concurred Irish finance minister Paschal Donohoe.
“These discussions are fundamentally linked to our own autonomy and to the resilience of our currency,” he added, stating that a European central bank digital currency (CBDC) was now critical to staying ahead of the curve.
In February, the European Central Bank said it was expanding the development of its CBDC payment system to settle transactions between institutions. The ECB has been exploring CBDCs since 2020, including a consumer-facing retail digital euro and wholesale cross-border settlement between central banks.
Meanwhile, Trump has spoken out against a Federal Reserve CBDC, signing an executive order in January to establish a crypto working group while prohibiting the “establishment, issuance, circulation, and use” of a US CBDC.
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The ECB has also rejected the idea of adding Bitcoin (BTC) to its monetary reserves or allowing other European central banks to do so.
In late January, ECB President Christine Lagarde said that the reserves of central banks have to be “liquid, secure and safe,” implying that they would not include crypto assets.
She added that she was “confident” that Bitcoin would not enter the reserves of banks under the European Council.
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United States President Donald Trump announced on Sunday that most Americans will receive a $2,000 “dividend” from the tariff revenue and criticized the opposition to his sweeping tariff policies.
“A dividend of at least $2000 a person, not including high-income people, will be paid to everyone,” Trump said on Truth Social.
The US Supreme Court is currently hearing arguments about the legality of the tariffs, with the overwhelming majority of prediction market traders betting against a court approval.
Kalshi traders place the odds of the Supreme Court approving the policy at just 23%, while Polymarket traders have the odds at 21%. Trump asked:
“The president of the United States is allowed, and fully approved by Congress, to stop all trade with a foreign country, which is far more onerous than a tariff, and license a foreign country, but is not allowed to put a simple tariff on a foreign country, even for purposes of national security?”
Investors and market analysts celebrated the announcement as economic stimulus that will boost cryptocurrency and other asset prices as portions of the stimulus flow into the markets, but also warned of the long-term negative effects of the proposed dividend.
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The proposed economic stimulus will boost asset markets, but at a steep cost
Investment analysts at The Kobeissi Letter forecast that about 85% of US adults should receive the $2,000 stimulus checks, based on distribution data from the economic stimulus checks during the COVID era.
While a portion of the stimulus will flow into markets and raise asset prices, Kobeissi Letter warned that the ultimate long-term effect of any economic stimulus will be fiat currency inflation and the loss of purchasing power.
“If you don’t put the $2,000 in assets, it is going to be inflated away or just service some interest on debt and sent to banks,” Bitcoin analyst, author, and advocate Simon Dixon said.
“Stocks and Bitcoin only know to go higher in response to stimulus,” investor and market analyst Anthony Pompliano said in response to Trump’s announcement.
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Italian banks have expressed their support for the European Central Bank’s (ECB) digital euro initiative, but are calling for the implementation costs to be spread out over several years due to the financial burden it places on the sector.
“We’re in favour of the digital euro because it embodies a concept of digital sovereignty,” said Marco Elio Rottigni, General Manager of the Italian Banking Association (ABI), during a press seminar in Florence, Reuters reported on Friday.
“Costs for the project, however, are very high in the context of the capital expenditure banks must sustain. They could be spread over time,” Rottigni added.
The comments come as the central bank digital currency (CBDC) project has met resistance from some French and German banks, who fear the introduction of an ECB-backed retail wallet could drain deposits from commercial lenders.
Related: Digital euro CBDC is ‘symbol of trust in our common destiny’ — ECB head
ECB sets 2029 target for digital euro launch
At its October 29–30 meeting in Florence, the ECB’s Governing Council approved moving the project into its next phase after a two-year preparatory period. A pilot phase is expected to begin in 2027, with a full rollout tentatively scheduled for 2029, pending the adoption of EU legislation in 2026.
European Parliament member Fernando Navarrete, who is leading the parliament’s review of the proposal, recently presented a draft report calling for a scaled-down version of the digital euro to protect private payment systems such as Wero, a joint initiative by 14 European banks, per the report.
Rottigni said Europe should pursue a “twin approach,” combining the ECB’s digital euro with commercial bank-backed digital currencies. “What Europe shouldn’t do is fall behind,” he added.
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ECB signs deals with tech firms for digital euro development
Last month, the ECB finalized framework agreements with seven technology providers to support the development of a potential digital euro. The agreements cover fraud and risk management, secure payment data exchange, and software development.
Among the firms involved are fraud-detection specialist Feedzai and security technology company Giesecke+Devrient (G+D).
According to the ECB, the selected firms will also develop features such as “alias lookup,” enabling users to send or receive payments without knowing the recipient’s payment service provider and offline payment capabilities.
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