Germany‘s Central Bank President Touts Stablecoin Benefits for EU

Joachim Nagel, president of Germany’s central bank, the Deutsche Bundesbank, supported the introduction of a euro-pegged central bank digital currency (CBDC) and euro-denominated stablecoins for payments.

In remarks prepared for a speech at the New Year’s Reception of the American Chamber of Commerce in Frankfurt on Monday, Nagel said EU officials were “working hard” toward the introduction of a retail CBDC. Euro-denominated stablecoins, according to the central bank president, could also contribute to “making Europe more independent in terms of payment systems and solutions.”

“Notably, a wholesale CBDC would allow financial institutions to make programmable payments in central bank money,” said Nagel. “I also see merit in euro-denominated stablecoins, as they can be used for cross-border payments by individuals and firms at low cost.”

Nagel’s remarks come months after US President Donald Trump signed a bill into law establishing a framework for payment stablecoins in the country, potentially setting US dollar-pegged stablecoins on a path to challenge any possible rollout of a euro-pegged peer. The law is expected to be fully implemented 18 months after it was signed or 120 days after related regulations are finalized.

Related: ING Germany expands crypto ETP and ETN offerings with Bitwise, VanEck

The German central bank president’s comment on stablecoins did not include risks he mentioned last week at the Euro50 Group meeting. Nagel warned domestic monetary policy “could be severely impaired, not to mention that European sovereignty could be weakened” if US dollar-denominated stablecoins were to have significantly larger market share than a euro-pegged coin.

Stablecoin yield at issue in US bill under consideration

Washington lawmakers and White House officials have been meeting with representatives from the banking and crypto industries ahead of a potential vote on the CLARITY Act in the US Senate. The bill, expected to provide a comprehensive regulatory framework for digital assets, has been dividing many crypto industry and banking leaders due to its approach to stablecoin rewards, which has yet to be finalized in the legislation.