The European Union is speeding up its efforts to launch a digital euro in response to an executive order from US President Donald Trump. The order promotes the expansion of US dollar-backed stablecoins worldwide, leading to concerns in the eurozone about the growing influence of the dollar. Policymakers worry that the increasing adoption of stablecoins could diminish the euro's role in international finance. The European Central Bank (ECB) is concerned that stablecoins could attract more users away from conventional banks, and to counteract this shift, it is pushing for a digital euro. Eurozone banks are worried about potential disruptions to their deposit base, as a digital euro could lead customers to transfer funds from traditional banking institutions into ECB-backed wallets. Despite the risks, the ECB is actively testing the feasibility of the digital euro, but its launch is contingent on European lawmakers approving the necessary legislative framework. This executive order from Trump has also prohibited the Federal Reserve from issuing a central bank digital currency (CBDC), making the US the only major global economy to ban a government-backed digital dollar. This creates an opportunity for China and the EU to advance their CBDC initiatives without American competition.



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