Eurozone Banks to Launch Euro Stablecoin: A Risky Gambit?

Barcelona Barcelona, Oct 1 (The Conversation) Nine major European banks, including UniCredit, ING, and CaixaBank, have formed a consortium to introduce a euro stablecoin—cryptocurrency pegged to the euro's value. This move has sparked debates over its potential risks to the eurozone's economic stability.

Stablecoins are often considered less volatile than traditional cryptocurrencies like Bitcoin. However, by allowing banks to issue their tokens, this initiative could heighten risks during financial downturns, critics argue. In this scenario, trust between banks becomes crucial, similar to exchanging casino tokens between well-known establishments.

The introduction of a stablecoin offers the advantage of instantaneous transfers, but relies heavily on public trust in the issuing banks. Advocates highlight potential transaction cost reductions, yet skeptics warn that a loss of confidence in banks could lead to rapid devaluation, reminiscent of the 2008 financial crisis.

(With inputs from agencies.)