Euro Under Threat? Italy Warns Dollar Stablecoins Are Bigger Danger Than Trade Tariffs

In a stark warning to European policymakers, Italian Economy Minister Giancarlo Giorgetti has said that dollar-based stablecoins may pose a more serious threat to the euro than the ongoing global trade conflicts. His comments come as the United States accelerates legislation on stablecoins and the European Central Bank races to develop its digital euro project in response.

Dollar Stablecoins vs. Euro: A Currency Clash Brewing

Speaking at a Milan asset management event, Giorgetti highlighted the appeal of U.S. dollar-pegged stablecoins to citizens across Europe. He warned that these digital assets, which offer stable savings and seamless cross-border payments, could erode the euro’s global role, especially given Europe’s fragmented payment infrastructure.

While the world’s attention remains fixed on trade tariffs and geopolitical tensions, Giorgetti stressed that Washington’s stablecoin policy is quietly reshaping global finance. U.S. lawmakers are currently reviewing two bills—the STABLE Act and the GENIUS Act—that would enforce Treasury bond backing for stablecoins, further legitimizing them as digital dollar proxies.

Digital Euro Project: Europe’s Answer to the Stablecoin Surge

To combat the growing influence of dollar-backed tokens, the European Central Bank is advancing the digital euro project, a central bank digital currency (CBDC) aimed at restoring the euro’s relevance in the digital era. This project would allow EU citizens to hold digital wallets directly with the ECB and conduct peer-to-peer, in-store, or online payments seamlessly.

Giorgetti described the initiative as “essential” to preventing capital outflows from the eurozone into U.S. assets. He believes the digital euro project could provide a secure alternative to foreign stablecoins, while also reinforcing the region’s monetary sovereignty.

However, the digital euro still faces internal resistance, especially from commercial banks. Financial institutions fear that mass adoption of ECB-backed wallets could trigger deposit flight, eroding their balance sheets and operational viability.

Stablecoins Appeal to Eurozone Residents Amid Fragmented Payment Systems

While stablecoins were initially seen as tools for emerging markets, Giorgetti warned they are now gaining popularity among Europeans as well. Their ability to offer stable returns without requiring U.S. bank accounts makes them an attractive option for savings and cross-border transactions, even within advanced economies like the eurozone.

This appeal is particularly dangerous in light of Europe’s disjointed payment ecosystem. Without a unified framework to counter dollar-denominated digital assets, the euro risks being sidelined in both retail and institutional transactions.

Giorgetti’s comments echo similar concerns voiced by economists like Zhang Ming, who believe the U.S. is using dollar-backed stablecoins to extend dollar hegemony through technological dominance rather than traditional finance or diplomacy.

Conclusion: The EU Faces a Digital Currency Crossroads

Giorgetti’s warnings are a wake-up call for the EU. As dollar-based stablecoins gain traction and U.S. regulation evolves rapidly, the digital euro project must accelerate or risk falling behind. Europe’s financial sovereignty may hinge on offering a credible alternative to American-backed digital assets.

With the eurozone economy already facing macroeconomic headwinds, the emergence of stablecoins as digital dollar surrogates could exacerbate capital flight and undermine monetary control. The time for cautious deliberation may be over—Europe must act now to secure the euro’s digital future.