The European Union is accelerating work on a digital euro following the United States’ enactment of a federal stablecoin law in July, according to officials and industry sources.
The shift reflects concern in Brussels and Frankfurt that dollar-denominated stablecoins could entrench a US lead in digital payments unless Europe advances its own public money in electronic form.
President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act on 18 July 2025. The law creates the first federal framework for “payment stablecoins,” requiring 100 per cent reserve backing in cash or short-dated Treasuries, monthly public disclosures of reserves, and compliance with Bank Secrecy Act anti-money-laundering standards. Legal analyses describe it as a foundational regime for licensing issuers, including conditions for foreign participants in the US market.
EU policymakers view the US move as a competitive catalyst. The global stablecoin market—dominated by dollar-pegged tokens—has reached roughly $288 billion, raising the prospect that euro payments could increasingly migrate onto non-European rails. Officials are therefore weighing a faster timetable and a broader set of technical options for a digital euro, including deployment on a public blockchain such as Ethereum or Solana, a departure from earlier preferences for private infrastructure. Discussions remain exploratory and no architecture has been chosen.
The European Central Bank’s project is part of a multi-year effort to offer central bank money in digital form for retail payments alongside cash. The ECB entered a two-year preparation phase on 1 November 2023 to lay the groundwork for a potential launch, with workstreams covering a draft rulebook, selection of platform providers, and experiments on privacy-preserving features, online and offline use, and fraud prevention. The ECB reported further progress in July 2025. The preparation phase runs to 31 October 2025.
Legislation remains the critical path. The European Commission tabled its digital euro proposal in June 2023, but parliamentary work has been slow. In June, ECB President Christine Lagarde urged lawmakers to accelerate the file, arguing that privately issued stablecoins pose risks to monetary sovereignty and that EU rules are needed to enable an ECB decision. Internal Parliament tracking lists the file as moving slowly. ConsiliumReutersEuropean Parliament
ECB Executive Board member Piero Cipollone has repeatedly linked the initiative to strategic autonomy in payments. In public remarks this spring and summer, he said a digital euro could reduce dependence on non-European providers and mitigate risks from widespread use of foreign stablecoins. He has also indicated that, subject to legislation, the Governing Council aims to be in a position to decide on issuance later in 2025.
Design choices will be central to banking-sector impact. The Eurosystem has explored holding limits to prevent large-scale migration of retail deposits from commercial banks into digital euro wallets, alongside intermediated distribution through banks and payment firms. The project also envisages strong privacy features, including offline payments intended to function similarly to cash. These elements are intended to address concerns raised by national parliaments, banking associations and consumer groups during consultations.
The US law has added urgency to Europe’s timetable. Market participants expect Brussels and the ECB to clarify the technical pathway—centralised infrastructure, public-chain deployment, or a hybrid—during the final months of the preparation phase, in parallel with Council and Parliament deliberations on the legal framework. The outcome will determine how quickly a euro-area digital instrument can be introduced and how it will interoperate with private wallets and point-of-sale systems.
For now, officials emphasise continuity: physical cash remains legal tender; a digital euro, if launched, would complement rather than replace notes and coins. But the GENIUS Act has changed the external context. With the US setting federal rules for stablecoins and dollar-pegged tokens expanding, EU institutions face a compressed window to finalise legislation and technical standards if they are to anchor euro-denominated payments in public money in the digital era
