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European Banks Plan Euro Stablecoin to Counter U.S. Market Dominance

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A consortium of nine major European banks, including ING and UniCredit, announced on Thursday that they are creating a new Amsterdam-based company to launch a euro-denominated stablecoin by the second half of next year. The move aims to reduce reliance on U.S.-backed tokens and strengthen Europe’s role in the digital payments market.

The decision comes as U.S. financial firms prepare their own stablecoins, backed by President Donald Trump’s new regulatory framework, which could further cement America’s dominance in the sector.

Stablecoins—cryptocurrencies pegged to traditional currencies—have grown rapidly in use, not only for crypto trading but also for mainstream payments and cross-border settlements. While the global stablecoin market is worth nearly $300 billion, euro-denominated stablecoins account for just $620 million, according to recent Bank of Italy figures. Dollar-pegged tokens dominate the market.

“The initiative will provide a real European alternative to the U.S.-dominated stablecoin market, contributing to Europe’s strategic autonomy in payments,” the banks said in a joint statement.

Still, the project faces skepticism from the European Central Bank (ECB). ECB President Christine Lagarde has warned that privately issued stablecoins could pose risks to monetary policy and financial stability, urging lawmakers instead to support a digital euro backed by the central bank. Some commercial banks, however, worry that such a move would drain deposits from their institutions.

In addition to ING and UniCredit, participants include Banca Sella, KBC, DekaBank, Danske Bank, SEB, CaixaBank, and Raiffeisen Bank International. A CEO will be appointed soon, and the consortium signaled that other banks may join.

A recent Deutsche Bank report underscored the urgency, noting that emerging economies are increasingly adopting dollar-backed stablecoins in place of local deposits. “This has created a global monetary dilemma: countries should adopt stablecoins or risk being left behind. Europe is under particular pressure,” the report said.

Some European efforts have struggled to gain traction. Societe Generale’s crypto unit SG-FORGE launched a euro stablecoin in 2023, but it has seen limited adoption, with just €56.2 million in circulation. Its U.S.-dollar stablecoin has even less uptake at $32.25 million.

Meanwhile, U.S. banks like Bank of America and Citigroup are exploring stablecoins, but most of the market remains dominated by non-bank players such as Tether and Circle.

AI-Simulated Fed Meeting Shows Political Pressure Polarises Policymakers

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A new study from George Washington University has used AI agents modeled on Federal Reserve policymakers to simulate a July 2025 FOMC meeting — and the results suggest that political pressure can fragment decision-making even inside the central bank.

The research, by Sophia Kazinnik and Tara Sinclair, programmed AI agents with each policymaker’s historical stances, biographies, and speeches, then fed them real-time economic data and financial news. The AI-driven board reached decisions much like the real FOMC — but when political scrutiny was introduced, dissent increased and consensus eroded.

“This simulation shows that the Federal Reserve is only partially insulated from politics,” the authors wrote. “Outside scrutiny can shape internal decision-making, even in an institution guided by formal rules.”

Central Banks Turn to AI

While no central bank is ready to let AI set monetary policy, many are adopting the technology to improve analysis and efficiency:

  • Federal Reserve: researched generative AI to analyze FOMC minutes.

  • European Central Bank: uses machine learning to forecast euro-area inflation.

  • Bank of Japan: applies AI to economic analysis; its 2023 study used large language models to track price drivers shifting from raw materials to labor costs.

  • Reserve Bank of Australia: testing AI tools that summarize policy-related questions, though Governor Michele Bullock stressed the tech is for analysis, not policymaking.

A Bank for International Settlements (BIS) report in April noted AI’s “strategic importance” but said most central banks remain in the early adoption phase, citing governance and data quality as key hurdles.

The Fed simulation underscores both the promise and perils of applying AI to policymaking: while powerful at capturing complex dynamics, it also exposes how political forces might destabilize even rule-bound institutions.

ECB Targets Early 2026 Political Agreement for Launch of Digital Euro

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The European Central Bank (ECB) aims to have all key political decisions in place by early 2026 to pave the way for launching a digital euro, ECB Executive Board Member Piero Cipollone said on Thursday. Once the necessary legislation is finalized, the ECB expects it would take two to three years to launch the digital currency.

Although the ECB has been exploring a digital euro for several years, progress has been slow due to the absence of a proper legal framework. Cipollone expressed hope that EU political consensus could be reached before summer 2025, with additional legislative work by the European Parliament extending into early 2026.

Key Features of the Digital Euro:

  • Provides consumers with a direct claim on the ECB, unlike current card payments through private providers like Visa or Mastercard.

  • Designed to function similarly to cash, offering high security and offline payment options.

  • Supports both online and in-person transactions, enhancing digital resilience and financial sovereignty.

Strategic Context:

The urgency behind the initiative has increased due to geopolitical developments, particularly following the election of Donald Trump, which has heightened concerns over European dependence on U.S.-based digital payment infrastructure. Europe currently relies heavily on American financial firms, posing a potential strategic vulnerability.

French central bank governor François Villeroy de Galhau, also speaking at the event, noted that recent political shifts, such as Trump’s return to office, have strengthened the ECB’s resolve to press ahead with the digital euro project.

If launched successfully, the digital euro would position Europe among the global leaders in central bank digital currencies (CBDCs), alongside initiatives already underway in China and the United States.