The European Stability Mechanism (ESM) has voiced concerns regarding the United States’ stance on crypto, citing a blow to Europe’s monetary autonomy.
According to Pierre Gramegna, Managing Director of the ESM, the Trump administration’s endorsement of digital assets, particularly dollar-backed stablecoins, may impact Europe’s financial sovereignty.
Speaking in Brussels on Monday, Gramegna stated that an increase in the adoption of U.S. stablecoins could lead to a resurgence of global technology firms launching payment solutions based on these assets.
President Trump Stance on Crypto
For context, the Trump administration has taken a significant step in integrating digital assets into the financial system by signing an executive order to establish a Bitcoin reserve.
The order, signed last week, also includes a separate stockpile of various cryptos obtained through legal forfeitures. Notably, an earlier executive emphasized the need for the U.S. to dominate the stablecoin market to promote the use of the U.S. dollar globally.
These moves underscore the Trump administration’s shift toward embracing digital currencies.
Threatening Eurozone’s Financial Stability
However, ESM’s Gramegna suggested these developments could threaten the eurozone’s financial stability by increasing reliance on dollar-backed digital currencies. The ESM has reinforced its support for the European Central Bank’s (ECB) ongoing efforts to develop a digital euro.
The urgency behind this initiative has grown, with European policymakers now seeing it as essential to safeguarding strategic autonomy in an evolving financial landscape.
Caution on Bitcoin Reserves
Notably, the ECB remains firm against incorporating Bitcoin into its reserves. During a press conference in late January, ECB President Christine Lagarde dismissed the possibility, citing concerns over Bitcoin’s volatility and potential use in illicit activities.
She emphasized that central bank reserves must remain liquid, secure, and free from risks associated with money laundering.
Her remarks followed statements from the Governor of the Czech National Bank, who was considering including Bitcoin in its reserves with a limited allocation of up to 5%.
Despite this, Lagarde asserted that the ECB and its affiliated central banks remain aligned in their position that reserves should prioritize stability and security. While discussions on digital assets continue, the ECB focuses on ensuring that reserve holdings align with strict financial standards.
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