Germany Central Bank Head Advocates for European Crypto Stablecoins Under EU MiCA Framework
Key Takeaways
- Joachim Nagel, head of the Germany Bundesbank, is advocating for the adoption of euro-based crypto stablecoins and a retail CBDC in an effort to counteract the dominance of the US dollar.
- The urgency for Europe’s digital currency development is linked to the need for controlled digital payment systems independent of foreign currencies.
- Programs for a wholesale CBDC are aimed at allowing banks to conduct direct payments in central bank money, while the private sector’s stablecoins could enhance efficient cross-border transactions.
- European regulators are racing against the US as both develop legislative frameworks for stablecoins and digital currencies, with Europe poised to enforce MiCA regulations.
WEEX Crypto News, 2026-02-17 13:40:36
The financial landscape in Europe is poised for a significant transformation. The head of Germany’s Bundesbank, Joachim Nagel, has made a pronounced advocacy for adopting euro-based crypto stablecoins and even supports the institution of a retail central bank digital currency (CBDC). This pivot is not just a suggestion; according to Nagel, it is a necessity. The aim is clear: to protect Europe’s financial sovereignty from the overwhelming dominance of the US dollar.
The Shift to Crypto: Navigating New Financial Frontiers
Recent discussions within the European Union concerning the Markets in Crypto-Assets (MiCA) framework reflect a shift in attitude towards digital currencies, moving from caution to urgency. Europe is striving not to lag behind the United States as both regions aim to sculpt the future of digital currency and payments. The endorsement by the Bundesbank is not merely a policy stance; it embodies a strategic move to secure Europe’s digital payment infrastructure from becoming too reliant on the US dollar.
Dollar-backed stablecoins boast a commanding market value, surpassing $310 billion. In stark contrast, euro-backed liquidity presents an insignificant fraction. This disparity is a cause for concern among European regulators, as it risks the continent slipping into what can be termed as digital dollarization. The scenario pressures Europe into protecting its monetary sovereignty before equilibrium shifts unfavorably.
Driving the Push for European Crypto: Sovereignty and Competition
In a compelling speech in Frankfurt, Nagel emphasized the pivotal need for Europe to establish its own digital payment systems, thus preempting increased reliance on external monetary systems. With the United States advancing rapidly in stablecoin legislation, there is an implicit risk of further entrenching dollar dominance. Nagel’s position encapsulates a protective stance towards European monetary sovereignty, urging innovation and adoption before tipping points are reached.
The Nature of the MiCA Framework
The MiCA framework is a comprehensive set of regulations devised to create a structured ecosystem for cryptocurrencies across the EU. By laying down clear rules for digital asset issuance and services, MiCA aims to bring order and security into a realm largely defined by rapid innovation and volatility. This regulatory clarity not only sets a precedent within Europe but also provides an opportunity to compete globally, ensuring that euro-backed digital assets gain traction against their dollar counterparts.
Laying Down the Blueprint: Incremental Strategy and Implementation
In articulating a blueprint for Europe’s digital future, Nagel has drawn distinctions between retail and institutional applications of digital currencies. For financial institutions, he vocally supports the innovation of wholesale CBDCs—currency solutions that allow banks to execute programmable transactions using central bank currency. This approach could resolve many of the limitations inherent in today’s conventional banking systems, which are not optimized for direct programmable transactions.
In contrast, for the broader private sector, Nagel envisions stablecoins as viable tools to facilitate affordable and efficient international payments—especially for personal and business use. Where earlier dialogues centered on the threats posed by foreign-controlled stablecoins, the conversation is now shifting to Europe’s proactive development of competitive euro-based alternatives. This evolution mirrors the rapidly changing discourse surrounding global digital payments.
Will the Euro Stand Up to the Dollar?
Such a transition offers potentially substantial benefits for Europe if executed effectively. According to S&P Global Ratings, the potential growth trajectory for euro-pegged stablecoins is monumental. Estimates suggest that by 2030, they could swell to a staggering €570 billion under normal adoption scenarios. This forecast positions euro-pegged stablecoins not as niche, but as integral to the global financial system.
Beyond just numbers and projections, it is crucial to consider the regulatory dimensions of this transition. While the MiCA framework provides Europe with advantageous regulatory clarity relative to the US, overly stringent capital requirements could inadvertently hamper innovation. Political and legislative discussions must consider how to nurture innovation while maintaining security and oversight.
Regulatory Balancing Act
As both the United States and Europe race to finalize their respective legislative frameworks, the tension between fostering innovation and ensuring regulatory compliance becomes increasingly apparent. For Europe, the MiCA framework marks a pivotal attempt at striking this balance, providing an organized approach to digital currencies while remaining mindful of global market dynamics and political pressures.
Projecting Forward: A Digital Euro on the Horizon
The question remaining is not whether Europe will establish a digital euro, but how soon it will become a reality. With both the US and Europe moving forward with regulatory measures for digital currencies, the timeline for implementation is crucial. Europe’s success in this endeavor will largely depend on its ability to efficiently roll out these initiatives while adapting to an ever-evolving financial landscape.
Enhancing European Financial Autonomy: Strategic Imperatives
The support for digital currencies by Germany’s Bundesbank reflects a broader strategic imperative to bolster Europe’s financial autonomy. This move is shaped both by external pressures and internal aspirations, aiming to secure Europe’s economic future against an increasingly interconnected and competitive global backdrop.
Collaboration among EU nations is essential to achieving systemic scale and success, particularly as multiple European banks prepare to launch a joint euro stablecoin initiative as early as 2026. Such initiatives underscore a collective commitment to establishing the euro as a competitive force against the US dollar in the digital asset space.
Final Thoughts
Joachim Nagel’s advocacy for euro-based stablecoins and a CBDC is emblematic of the lengths to which Europe is willing to go to protect its fiscal sovereignty. Not just a dream on paper, these initiatives are set to redefine Europe’s financial landscape, ensuring resilience and competitiveness in the age of digital currency. The unfolding narrative is one of urgency, opportunity, and transformation, with Europe poised to secure its place at the forefront of global digital currency innovation.
FAQ
What are crypto stablecoins, and why are they important?
Crypto stablecoins are digital currencies pegged to a stable reserve asset, such as a fiat currency like the euro or US dollar. They are designed to minimize price volatility, making them a valuable tool for transactions and savings. Stablecoins are important because they can offer efficiency in cross-border payments and greater financial inclusion without the risks associated with traditional cryptocurrencies like Bitcoin.
How does the EU’s MiCA framework affect digital currency use in Europe?
The MiCA (Markets in Crypto-Assets) framework is designed to regulate the issuance of and services related to digital assets within the EU. It provides clarity and security for digital currency operations, fostering innovation while ensuring consumer protection. The framework positions Europe as a leader in digital asset regulation, potentially increasing the use and acceptance of cryptocurrencies across the continent.
Why is a digital euro seen as vital for European sovereignty?
A digital euro represents an opportunity for Europe to maintain monetary sovereignty in the face of increasing global digitalization of finance. It can reduce dependence on foreign currencies, like the US dollar, and enhance Europe’s ability to control its own financial systems, protecting against external economic shocks and ensuring competitive participation in global markets.
How do wholesale CBDCs differ from stablecoins?
Wholesale CBDCs (Central Bank Digital Currencies) are designed for transactions between financial institutions and are directly backed by central banks, facilitating direct programmable payments. In contrast, stablecoins are typically used by individuals and businesses for regular transactions. While both aim to enhance payment systems’ efficiency, wholesale CBDCs focus on institutional transactions, whereas stablecoins cater to a broader audience.
What are the potential obstacles to the adoption of a digital euro?
Potential obstacles include regulatory and legislative challenges in balancing innovation with stability and security. Stricter capital requirements could slow down the development of innovation. Additionally, political factors, especially opposition from other global powers wary of losing monetary influence, may pose hurdles. Coordinated efforts across EU member states are crucial to overcoming these challenges and ensuring the successful adoption of a digital euro.
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Editor's Note: Citrini7's cyberpunk-themed AI doomsday prophecy has sparked widespread discussion across the internet. However, this article presents a more pragmatic counter perspective. If Citrini envisions a digital tsunami instantly engulfing civilization, this author sees the resilient resistance of the human bureaucratic system, the profoundly flawed existing software ecosystem, and the long-overlooked cornerstone of heavy industry. This is a frontal clash between Silicon Valley fantasy and the iron law of reality, reminding us that the singularity may come, but it will never happen overnight.
The following is the original content:
Renowned market commentator Citrini7 recently published a captivating and widely circulated AI doomsday novel. While he acknowledges that the probability of some scenes occurring is extremely low, as someone who has witnessed multiple economic collapse prophecies, I want to challenge his views and present a more deterministic and optimistic future.
In 2007, people thought that against the backdrop of "peak oil," the United States' geopolitical status had come to an end; in 2008, they believed the dollar system was on the brink of collapse; in 2014, everyone thought AMD and NVIDIA were done for. Then ChatGPT emerged, and people thought Google was toast... Yet every time, existing institutions with deep-rooted inertia have proven to be far more resilient than onlookers imagined.
When Citrini talks about the fear of institutional turnover and rapid workforce displacement, he writes, "Even in fields we think rely on interpersonal relationships, cracks are showing. Take the real estate industry, where buyers have tolerated 5%-6% commissions for decades due to the information asymmetry between brokers and consumers..."
Seeing this, I couldn't help but chuckle. People have been proclaiming the "death of real estate agents" for 20 years now! This hardly requires any superintelligence; with Zillow, Redfin, or Opendoor, it's enough. But this example precisely proves the opposite of Citrini's view: although this workforce has long been deemed obsolete in the eyes of most, due to market inertia and regulatory capture, real estate agents' vitality is more tenacious than anyone's expectations a decade ago.
A few months ago, I just bought a house. The transaction process mandated that we hire a real estate agent, with lofty justifications. My buyer's agent made about $50,000 in this transaction, while his actual work — filling out forms and coordinating between multiple parties — amounted to no more than 10 hours, something I could have easily handled myself. The market will eventually move towards efficiency, providing fair pricing for labor, but this will be a long process.
I deeply understand the ways of inertia and change management: I once founded and sold a company whose core business was driving insurance brokerages from "manual service" to "software-driven." The iron rule I learned is: human societies in the real world are extremely complex, and things always take longer than you imagine — even when you account for this rule. This doesn't mean that the world won't undergo drastic changes, but rather that change will be more gradual, allowing us time to respond and adapt.
Recently, the software sector has seen a downturn as investors worry about the lack of moats in the backend systems of companies like Monday, Salesforce, Asana, making them easily replicable. Citrini and others believe that AI programming heralds the end of SaaS companies: one, products become homogenized, with zero profits, and two, jobs disappear.
But everyone overlooks one thing: the current state of these software products is simply terrible.
I'm qualified to say this because I've spent hundreds of thousands of dollars on Salesforce and Monday. Indeed, AI can enable competitors to replicate these products, but more importantly, AI can enable competitors to build better products. Stock price declines are not surprising: an industry relying on long-term lock-ins, lacking competitiveness, and filled with low-quality legacy incumbents is finally facing competition again.
From a broader perspective, almost all existing software is garbage, which is an undeniable fact. Every tool I've paid for is riddled with bugs; some software is so bad that I can't even pay for it (I've been unable to use Citibank's online transfer for the past three years); most web apps can't even get mobile and desktop responsiveness right; not a single product can fully deliver what you want. Silicon Valley darlings like Stripe and Linear only garner massive followings because they are not as disgustingly unusable as their competitors. If you ask a seasoned engineer, "Show me a truly perfect piece of software," all you'll get is prolonged silence and blank stares.
Here lies a profound truth: even as we approach a "software singularity," the human demand for software labor is nearly infinite. It's well known that the final few percentage points of perfection often require the most work. By this standard, almost every software product has at least a 100x improvement in complexity and features before reaching demand saturation.
I believe that most commentators who claim that the software industry is on the brink of extinction lack an intuitive understanding of software development. The software industry has been around for 50 years, and despite tremendous progress, it is always in a state of "not enough." As a programmer in 2020, my productivity matches that of hundreds of people in 1970, which is incredibly impressive leverage. However, there is still significant room for improvement. People underestimate the "Jevons Paradox": Efficiency improvements often lead to explosive growth in overall demand.
This does not mean that software engineering is an invincible job, but the industry's ability to absorb labor and its inertia far exceed imagination. The saturation process will be very slow, giving us enough time to adapt.
Of course, labor reallocation is inevitable, such as in the driving sector. As Citrini pointed out, many white-collar jobs will experience disruptions. For positions like real estate brokers that have long lost tangible value and rely solely on momentum for income, AI may be the final straw.
But our lifesaver lies in the fact that the United States has almost infinite potential and demand for reindustrialization. You may have heard of "reshoring," but it goes far beyond that. We have essentially lost the ability to manufacture the core building blocks of modern life: batteries, motors, small-scale semiconductors—the entire electricity supply chain is almost entirely dependent on overseas sources. What if there is a military conflict? What's even worse, did you know that China produces 90% of the world's synthetic ammonia? Once the supply is cut off, we can't even produce fertilizer and will face famine.
As long as you look to the physical world, you will find endless job opportunities that will benefit the country, create employment, and build essential infrastructure, all of which can receive bipartisan political support.
We have seen the economic and political winds shifting in this direction—discussions on reshoring, deep tech, and "American vitality." My prediction is that when AI impacts the white-collar sector, the path of least political resistance will be to fund large-scale reindustrialization, absorbing labor through a "giant employment project." Fortunately, the physical world does not have a "singularity"; it is constrained by friction.
We will rebuild bridges and roads. People will find that seeing tangible labor results is more fulfilling than spinning in the digital abstract world. The Salesforce senior product manager who lost a $180,000 salary may find a new job at the "California Seawater Desalination Plant" to end the 25-year drought. These facilities not only need to be built but also pursued with excellence and require long-term maintenance. As long as we are willing, the "Jevons Paradox" also applies to the physical world.
The goal of large-scale industrial engineering is abundance. The United States will once again achieve self-sufficiency, enabling large-scale, low-cost production. Moving beyond material scarcity is crucial: in the long run, if we do indeed lose a significant portion of white-collar jobs to AI, we must be able to maintain a high quality of life for the public. And as AI drives profit margins to zero, consumer goods will become extremely affordable, automatically fulfilling this objective.
My view is that different sectors of the economy will "take off" at different speeds, and the transformation in almost all areas will be slower than Citrini anticipates. To be clear, I am extremely bullish on AI and foresee a day when my own labor will be obsolete. But this will take time, and time gives us the opportunity to devise sound strategies.
At this point, preventing the kind of market collapse Citrini imagines is actually not difficult. The U.S. government's performance during the pandemic has demonstrated its proactive and decisive crisis response. If necessary, massive stimulus policies will quickly intervene. Although I am somewhat displeased by its inefficiency, that is not the focus. The focus is on safeguarding material prosperity in people's lives—a universal well-being that gives legitimacy to a nation and upholds the social contract, rather than stubbornly adhering to past accounting metrics or economic dogma.
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