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. 

Related: Crypto academics slam controversial ECB paper blasting Bitcoin

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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