Digital Euro: ADAN Highlights the Need for a Digital Euro to Foster Innovation, Competitiveness, and European Sovereignty

The transition to the future European digital economy hinges on the issuance and availability of a digital euro. Given the lead taken by the United States and Asia,the digital euro is crucial to Europe’s competitiveness and the monetary sovereignty of the eurozone.

Thanks to the potential of blockchain technology and crypto-assets,the digital euro would indeed offer a wide range of new opportunities in the monetary, banking, and financial sectors interms of transparency, reliability, programmability, resilience, privacy, and efficiency.  

The European Central Bank (ECB) is currently exploring the potential features of its digital currency (CBDC) within the European Monetary Union. ADAN is concerned about the impact of these decisions on the crypto-asset industry and users.

Therefore, if the ECB launches pilot projects, it is essential that this euro CBDC have the following characteristics: 

• Citizen ownership and control.
• Issuance on one or more open blockchain networks that are compatible with the requirements set by the ECB.
• Coexistence with stablecoins, due to their complementary nature.
• Support for the crypto-asset sector with a view to its expansion and the development of the new monetary, banking, and financial system.

On the other hand, if the ECB chooses not to issue its own euro-denominated CBDC,Europe’s sovereignty and economic competitiveness will have to rely onstablecoins,whose development must therefore be supported. To this end: 

• Their regulatory framework must be proportionate, appropriate, and conducive to innovation and competition.
• A regulatory paradigm shift must be initiated regarding decentralized stablecoins (and finance). 
• Interoperability among different stablecoins should be encouraged to facilitate the emergence of a true monetary unit.

In either of these scenarios—without which the digital euro would be meaningless—the EU must support the development of the crypto-asset industry as a whole. The United States’ strong competitive edge in private digital currencies and Asia’s progress on its “digitized” currency are widening the gap in the global currency competition. The development of private stablecoins and the opening up of competition in payment methods with the help of innovative players are an effective way to address these challenges.