Key points
- Nine major European banks form a consortium to create a new stablecoin. The stablecoin, pegged to the euro, aims to launch in the second half of 2024.
- The initiative aims to offer a regulated and trusted solution for digital payments.
- The move signals a growing mainstream finance interest in digital markets.
- The ECB remains skeptical about stablecoins, instead advocating for a digital euro.
A consortium of nine prominent European banks, including ING, UniCredit, and DekaBank, announced the formation of a new company to launch a euro-denominated stablecoin. This significant development marks a noteworthy shift towards the adoption of digital assets within mainstream European finance.
The new entity, headquartered in Amsterdam, plans to introduce its stablecoin into the market during the second half of 2024. This initiative aims to provide a regulated and trusted platform for on-chain payments and settlements, addressing a growing need for secure and efficient digital transactions.
The participating banks – also including Banca Sella, KBC, Danske Bank, SEB, Caixabank, and Raiffeisen Bank International – envision their stablecoin as a catalyst for growth and financial sovereignty within Europe. The consortium emphasizes the need for a secure and regulated solution for digital payments, contrasting with the current landscape where the U.S. dollar overwhelmingly dominates the stablecoin market.
This dominance is reflected in global stablecoin issuance figures, which show nearly $300 billion in circulation, predominantly pegged to the dollar, while euro-denominated stablecoins represent a significantly smaller fraction.
Despite the initiative, the European Central Bank (ECB) has expressed reservations regarding stablecoins, citing potential risks to monetary policy and financial stability. ECB President Christine Lagarde has urged the introduction of a digital euro, highlighting the need for regulated digital currencies within the Eurozone.
However, this initiative by commercial banks represents a proactive step to address the growing demand for digital payment solutions, showcasing a proactive stance from the financial sector.
The launch of this euro-denominated stablecoin follows previous attempts, such as the euro-based stablecoin launched by Societe Generale’s crypto arm. However, that initiative has seen limited adoption, with only 56.2 million euros in circulation. The new consortium, by combining the resources and expertise of several large banks, is aiming for broader adoption and wider integration into the European financial ecosystem.
The appointment of a CEO is expected soon, and the consortium anticipates further participation from other institutions.
