Bundesbank’s Nagel Urges Euro‑Pegged Stablecoins and Wholesale CBDC to Counter Dollarization

Bundesbank President Joachim Nagel urged accelerated development of euro‑pegged stablecoins and a wholesale central bank digital currency (CBDC) to bolster the euro’s international role and guard against potential dollarization. Nagel said euro‑denominated stablecoins can enable lower‑cost cross‑border payments and programmable transactions for individuals and firms, while a wholesale CBDC would let institutional actors settle in programmable central bank money. The Eurosystem is evaluating distributed‑ledger technology for non‑central‑bank money, including tokenised deposits and euro stablecoins, and aims to deliver a pan‑European retail digital euro by 2029. Nagel warned of risks if USD‑pegged stablecoins become widely used in the euro area, noting the stablecoin market remains dominated by dollar‑pegged tokens and totals over $300bn in capitalization. Critics caution that stablecoins can threaten monetary sovereignty, increase illicit‑use risks and undermine the “singleness of money”; some experts prefer tokenised bank deposits as a safer alternative. Nagel framed euro‑pegged instruments and a wholesale CBDC as defensive tools to preserve monetary policy effectiveness and European sovereignty amid geopolitical fragmentation.