The European Union is facing concerns over its monetary sovereignty and financial stability as US President Donald Trump continues to show support for digital assets. In a recent Eurogroup press conference, European Stability Mechanism (ESM) managing director Pierre Gramegna expressed worries about the US administration’s favorable stance towards cryptocurrencies and dollar-denominated stablecoins. He warned that this could potentially reignite plans by foreign and US tech giants to launch mass payment solutions based on stablecoins, which could have a significant impact on the euro area’s monetary sovereignty and financial stability.

To safeguard Europe’s strategic autonomy, Gramegna emphasized the urgency for the European Central Bank (ECB) to make the digital euro a reality. The ESM, an intergovernmental organization established by member states of the euro area, supports the ECB’s efforts in this regard. Irish finance minister Paschal Donohoe also stressed the importance of staying ahead of the curve and maintaining the resilience of the euro by developing a European central bank digital currency (CBDC).

Meanwhile, Trump has taken a different stance on CBDCs, signing an executive order in January to establish a crypto working group while prohibiting the establishment, issuance, circulation, and use of a US CBDC. This has sparked a debate on the potential impact of the US’s crypto pivot on Europe’s financial stability. The ECB has been exploring CBDCs since 2020, including a consumer-facing retail digital euro and wholesale cross-border settlement between central banks.

However, the ECB has also rejected the idea of adding Bitcoin (BTC) to its monetary reserves or allowing other European central banks to do so. ECB President Christine Lagarde has stated that central bank reserves must be liquid, secure, and safe, implying that they would not include crypto assets. She also expressed confidence that Bitcoin would not enter the reserves of banks under the European Council.

As the discussion on CBDCs and digital assets continues, it is clear that policy developments in other jurisdictions, particularly the US, can have significant consequences for Europe. The ECB’s efforts to develop a digital euro are now more critical than ever to safeguard Europe’s strategic autonomy and financial stability.