Lagarde Urges Quick Action on Digital Euro Amid Rising Stablecoin Concerns

On Monday, European Central Bank President Christine Lagarde made a compelling case to European lawmakers for speeding up legislation to introduce a digital euro. The ECB has been developing a digital version of the euro, seen as a potentially transformative financial tool, but legislative delays have stalled progress.

Lagarde highlighted the digital euro's importance for ensuring Europe's financial independence amidst the clamor of privately-issued stablecoins. She urged the European Parliament to swiftly establish a legislative framework, emphasizing the limited progress since the European Commission's proposal in June 2023.

While banks express concerns over potential revenue loss due to the ECB-guaranteed digital wallet, Lagarde outlined the risks posed by unregulated stablecoins, citing cases like TerraUSD's collapse. She called for harmonized global regulations to mitigate systemic vulnerabilities exposed by the fragmented approach in different jurisdictions.

(With inputs from agencies.)