ECB Chief Economist: Digital Euro is increasingly necessary to counter stablecoins and non-EU tech giant payment systems

On March 21, Philip Lane, chief economist of the European Central Bank (ECB), said that the US dollar stablecoin and the electronic payment system dominated by US technology giants are taking up an increasing share of the European financial system, and Europe needs a digital euro to meet this challenge. Electronic payment methods provided by large technology companies such as Apple Pay, Google Pay and PayPal put Europe at risk of economic pressure and external coercion. He emphasized that the digital euro will provide a safe and universally accepted digital payment option under the European regulatory framework, reduce dependence on foreign payment systems, and limit the influence of US dollar stablecoins in the euro area. Lane also pointed out that 99% of the current stablecoin market is composed of tokens anchored to the US dollar, which may lead to the euro area payment system gradually directly or indirectly anchoring the US dollar instead of the euro. Like other major economies, the ECB is studying the possibility of launching a central bank digital currency (CBDC) to cope with the competition brought by stablecoins and technology companies' payment systems. Lane believes that the euro area consists of 20 EU member states, and the payment system is fragmented due to different traditional standards in various countries. The digital euro will provide a unique opportunity to solve the problem of retail payment fragmentation in the euro area.