Central Bank Currents Digital against Stablescoins: Divergent prospects for the EU and the United States

The relationship between the digital currencies of the central bank (CBDC) and the Stablecoins will occupy the stage this year. The new United States policies support the stablescoins supported in dollars and oppose CBDC. European policies adopt the opposite position, arguing that CBDC – including digital Euro and digital book – provide financial stability, while cryptocurrencies and stablecoins create risks of financial stability. All political decision -makers agree on one point: CBDC and stablescoins will have a significant impact on the world role of the US dollar.

Few were surprised, therefore, when President Trump began his second term with an executive decree that hieres stablecoins as a favorite mechanism to protect both the world role of the US dollar and financial stability. The decree also said that CBDCs create threats of financial stability. On the other hand, the minutes of the monetary policy from the meeting of the rate of the rate of the European Central Bank of December 2024 took the opposite position and proposed that cryptographic assets can create threats of financial stability for the euro zone.

The political landscape of reserve currency 2025: four key problems to monitor

Legislation: Despite their political differences, the European Union (EU) and American decision -makers are all confronted with the same obstacle. CBDC cannot be issued without legislation. The legislators of Brussels, London and Washington each refuse to advance quickly. The European Parliament to date has refused to plan a vote on the digital package of the Euro submitted by the European Commission – despite the request of the ECB. The British Parliament did not do before with a Digital Pound initiative.

The congress led by the Republicans and the White House oppose CBDC, ensuring that no CBDC legislation goes forward in the United States in the foreseeable future. The federal reserve agrees. President Jerome Powell told Congress yesterday that he would not propose or continue a digital dollar during the balance of his mandate at the Central Bank. President Powell’s mandate expires in the spring of 2026. All relevant political decision-makers in the United States (the White House, Congress managers, regulatory agencies, the central bank) are now united in their opposition to a national CBDC. Their objective now turns to the articulation of a legislative and regulatory framework supporting the stablecoins.

The maintenance of the Chairman’s President of the Chamber in 2025 with CNBC confirms that the main American legislators believe that the extended adoption of the stablescoin would “extend the status of reserve currency” of the US dollar in the world. In addition, the Governor of the Federal Reserve Christopher Waller is now publicly supports the stablecoins “because they are likely to spread the status of the dollar as a reserve currency, although they need a clear set of rules and regulations. ” The president of the senatorial banking committee, Tim Scott, weighed in January, committing to develop a “stable regulatory framework which … will promote the choice, education and protection of consumer and ensure compliance with all appropriate requirements of the law on banks’ secrecy ”. It remains to be seen if the stable -coated dollars could strengthen the role of the dollar in the global payment system.

The structure of the legislation will have a significant impact on the growth trajectories of the Stablecoin markets at the national and international level, with implications for the American sovereign bond markets. For example, a regulatory framework could demand that Stablecoin issuers hold the titles of the US Treasury to support their stalls, thus guaranteeing liquidity and demand for a sovereign document labeled in US dollars. Additional proposals to create a reserve of cryptographic assets at the federal level could provide additional liquidity support to cryptographic markets.

Geopolitics: President Trump has campaigned on the promises of safeguarding the global role of the dollar. Its promises included the prices exerted as a mechanism to discipline foreign countries which undermine the global role of the dollar, probably in addition to the application of aggressive sanctions. The Trump administration is not the only one to raise red flags concerning certain cases of use of the CBDC. There is an international concern internationally that non -American CBDC networks could be used to escape Western sanctions. In this context, in October 2024, the bank for international colonies withdrew from the CBDC Mbridge project in wholesale, whose members include central banks of China, Hong Kong, Thailand, the United Arab Emirates and the ‘Saudi Arabia. The director general of the BIS reiterated the policy that “… the bis does not work with any country, and its products cannot be used by countries subject to sanctions … We must be attentive to the sanctions and to all the products that We have put in place should not be a duct to violate the sanctions. In addition, Russia has called for a global multipolar financial system with a separate non -dollar regulation system.

Free markets distributed: The Stablecoins are currently occupying a small fraction of the activity of the financial market. The crypto itself remains minor compared to the American capital markets. Globally, the estimated size of the StablesCoin market is $ 227 billion in market capitalization, compared to $ 6.22 billions of US capital markets and 3.39 billions of dollars for the global crypto- cash. If the growth rates with two current figures for the stablescoins continue, they could constitute a considerable proportion of the overall market capitalization of cryptography, otherwise the markets of the capital themselves. Most importantly, the vast majority of stablecoins are set to the US dollar.

Quick adoption rates associated with rapid transaction volumes and speed on the Stablecoin markets mean that Stablecoin and CBDC decisions today can amplify continuous movement on the reserve currency markets. The dramatic changes in the status of reserve currency have historically been rare events. The more likely scenario for threats to the domination of the dollar implies a range of alternative currencies eating the role of the dollar on the sidelines. While the US dollar is comfortably in the lead, representing 49.2% of the international payment mail via SWIFT, its share of FX global reserves increased from 71% in 2001 to 54.8% at present. The drop in demand from dollars has increased the demand for non -traditional currencies, gold and several pairs of local currencies, rather than traditional reserve currencies.

In this context, the choices made by individual users may have a significant impact on the state of the global reserve currency. The general adoption of stable -coated stables in US dollars could even reverse the trend of relaxation. The decisions taken by political decision -makers in 2025 will therefore have a significant impact on the way in which the Stablecoin and a dollar markets are evolving.

European cryptography rules: EU officials promote the digital euro as a mechanism to provide strategic and economic autonomy compared to the US dollar. In terms of retail, they compete with local payment processes currently dominated by American credit card companies. On a global scale, they facilitate the increase in the use of the euro as an international transaction currency. Secondary use cases include the use of blockchain technology to create “tokenized” deposits (worded in euros) that would cement the role of commercial banks in the payment system. European decision -makers have also started to experiment with token titles. Slovenia has become the first sovereign country in the euro zone to issue a sovereign obligation of the Euro tokenized area. In December, the Banque de France became the first central bank in the euro zone to carry out transactions on the secondary sovereign fixed income market and equity using anonymous digital currency on a blockchain.

However, if a critical mass of individuals in a country has wealth in a stable foreign currency, the competitive landscape, if not the survival of other reserve currencies, requires that they provide a digital alternative. The scenario also creates incentives for other jurisdictions in order to make it difficult to achieve interoperability with non -euro stables, while creating economic obstacles so that local users choose stablecoins supported in US dollars – essentially preserving their economic sovereignty and monetary.

Some see the regulatory framework for the newly issued EU cryptography – Cryptographic asset markets (MICA); And in particular the ratio 1: 1 of the liquid reserves required for stable stages – as a strategic tool to increase obstacles to non -EU stabbing issuers denominated in US dollars. Mica extends the regulatory requirements of the banking type to issuers and intermediaries of cryptographic assets. We have discussed this framework and its relationship with the political landscape of the United States Crypto Asset in our economographic test of January 28, 2025. The framework potentially provides European regulators during the time and the tools to play defense by regulating local markets of Stablecoin to allow either a digital euro or stablecoins denominated in euros to gain market field. Market data will provide the measure of the efficiency of policies.

Barbara Matthews is a non -resident main woman at the Geoeconomic Center of the Atlantic Council. She is also founder and CEO of Bcmstrategy, Inc., a company that generates AI training data and signals concerning public policy.

Hung Tran is a non -resident principal researcher at the Geoeconomics center of the Atlantic Council and Senior Stock Exchange at the Policy Center for the New South; A former senior official of the Institute of International Finance and the International Monetary Fund.

At the intersection of the economy, finance and foreign policy, the Geoeconomic center is a translation center in order to help shape a better world economic future.

Upon reading

Game 23 January 2025

What is the next step in the regulation of cryptography in the United States?

Economical
By
Ananya Kumar

What does success really look like on the regulatory front? What does this mean for the rest of the world? We dive into the dozen bills in consideration at Congress and zoom in on the three major themes of cryptographic regulations in 2025.