The new Amsterdam-based company is expected to launch its stablecoin in the second half of next year
[FRANKFURT] A consortium of nine European banks, including ING and UniCredit, said on Thursday (Sep 25) they are forming a new company to launch a euro-denominated stablecoin, a move they hope will help counter US digital market dominance.
A host of top US financial firms have been preparing to launch their own US dollar-backed crypto tokens after President Donald Trump signed a law overseeing rules for stablecoins that could further cement US hegemony.
The use of stablecoins – designed to maintain a constant value and backed by traditional currencies – has exploded in recent years, notably among crypto traders moving funds to and from more volatile tokens. But they are also used in mainstream digital payments and cross-border transactions.
The European banks’ new Amsterdam-based company is expected to launch its stablecoin in the second half of next year.
US stablecoin dominance, ECB remains sceptical
While global stablecoin issuance stands at nearly US$300 billion, euro-denominated stablecoins totalled just US$620 million, according to figures released last week by the Bank of Italy, with US dollar-pegged tokens overwhelmingly dominant.
“The initiative will provide a real European alternative to the US-dominated stablecoin market, contributing to Europe’s strategic autonomy in payments,” the banks said.
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They launched the effort, which they said will create a token that can be used for quick, low-cost payments and settlements, even as the European Central Bank voices scepticism over stablecoins.
ECB president Christine Lagarde in June told European policymakers that privately issued stablecoins posed risks for monetary policy and financial stability. As a safer alternative, she has urged European lawmakers to introduce legislation backing the launch of a digital version of the EU’s single currency.
Some commercial banks, however, have pushed back against the introduction of a digital euro, fearing that it would empty their coffers as customers transfer cash out of banks and into the safety of an ECB-guaranteed wallet.
In addition to ING and UniCredit, the other banks participating in the new company include Banca Sella, KBC, DekaBank, Danske Bank, SEB, Caixabank and Raiffeisen Bank International.
They said that others could join the initiative, and a CEO for the company would be appointed soon.
A recent report by Deutsche Bank highlighted that emerging market economies, in particular, are adopting US dollar-based stablecoins to replace local deposits and cash.
“This has created a global monetary dilemma: countries should adopt stablecoins or risk being left behind. Europe is under particular pressure,” the report said.
Societe Generale’s crypto arm, SG-FORGE, launched a euro-based stablecoin in 2023, although it has not been widely adopted, with just 56.2 million euros (S$85 million) in circulation, according to its website. The French bank also launched a US-dollar stablecoin earlier this year. REUTERS
