Trump’s approach to crypto could threaten the financial stability of Europe

The European Union (EU) expresses growing concern over the crypto-friendly policy of the United States administration led by Donald Trump.

An increase in payment solutions based on dollar stablecoins could influence European monetary sovereignty, according to Pierre Gramegna, director general of the European Stability Mechanism (ESM).  

The importance of a digital euro to maintain the economic autonomy of the EU and concerns regarding Trump’s crypto approach

During a press conference of the Eurogroup on March 10, Gramegna emphasized how the current orientation of the United States towards digital assets, particularly the stablecoin denominated in dollars, could create problems for Europe.

He warned that this situation could encourage tech giants, both American and international, to launch large-scale payment systems based on dollar stablecoins. 

If such platforms were successful, they could undermine the financial stability and monetary sovereignty of the euro area.  

In response to this threat, the ESM strongly supports the urgency of the creation of the digital euro. According to Gramegna, the launch of a digital version of the single currency is more necessary than ever to protect Europe’s strategic autonomy.  

The ESM is an intergovernmental organization that assists eurozone countries in overcoming financial crises and ensuring sustainable economic growth. 

The Irish Finance Minister, Paschal Donohoe, also agreed on the importance of anticipating the technological developments of other nations. The absence of a competitive European digital infrastructure could jeopardize the resilience of the single currency.  

These statements come at a time when the European Central Bank (ECB) is accelerating efforts to develop the digital euro.

Since 2020, the institute has begun exploring the issuance of a centralized digital currency, evaluating both a digital euro intended for consumers and a system for settling payments between financial institutions.  

In February, the banking institution announced the expansion of the CBDC (Central Bank Digital Currency) system to facilitate interbank transactions. 

This step is part of the European strategy to reduce dependence on the dollar and maintain control over its own monetary policy.  

The position of the United States and the reaction of the ECB  

While Europe proceeds with the development of its own CBDC, the Trump administration has adopted a decidedly different stance. 

In January, the former president signed an executive order that prohibits the creation and use of a centralized digital currency in the United States. At the same time, he established a working group to examine policies related to criptovalute.  

Another critical aspect is the exclusion of Bitcoin (BTC) from the reserves of European central banks. 

The president of the ECB, Christine Lagarde, recently reiterated that central bank reserves must be liquid, safe, and stable, criteria that Bitcoin does not meet. 

He also expressed confidence that no European central bank will adopt the cryptocurrency as part of its reserves.  

The clash between the policies adopted by the United States and Europe on cryptocurrency regulation highlights a significant divergence in monetary strategies.

While the Trump administration pushes for a more open cryptocurrency market based on private digital assets, the European Union expresses skepticism and prefers to develop a centralized digital currency under the control of the ECB.  

If the trend of digital assets in dollars were to expand significantly, Europe could face a loss of control over its monetary policy. 

This scenario would strengthen the economic influence of the United States, making it essential to accelerate the development of the digital euro to ensure an effective protection of European monetary sovereignty.

The balance of the global financial system now depends on how the two economies will manage the evolution of cryptocurrencies. The prudent approach of the EU and the pro-crypto strategy of the United States outline two opposing visions that could have a lasting impact on international markets.