In response to US President Donald Trump's promotion of stablecoins, European Central Bank board member Piero Cipollone has stated that eurozone banks need a digital euro, as reported by Reuters on Friday.
Cipollone believes this would help counter the threat of losing customers turning to stablecoins and put pressure on the ECB to create its own digital currency.
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By offering exposure to short-term interest rates in official currencies, similar to money market funds, stablecoins have the potential to lure customers away from traditional banks.
A digital euro, meanwhile, would function as a secure online wallet provided by companies such as banks, allowing payments to be made even to those without bank accounts. However, holdings are likely to be limited and not interest-bearing.