Report - US Digital Asset Strategy and the European Response
This report was requested by the European Parliament's Committee on Economic and Monetary Affairs
It has been argued that the digital euro in preparation at the ECB would protect Europe’s monetary sovereignty against the US Digital Asset Strategy (or other risks). We tend to disagree
by Ignazio Angeloni and Cédric Tille
This document was provided by the Economic Governance and EMU Scrutiny Unit at the request of the Committee on Economic and Monetary Affairs (ECON) ahead of the Monetary Dialogue with the ECB President on 23 June 2025.
Executive Summary
The Digital Asset Strategy (henceforth, DAS) laid out in two recent US President’s executive orders involves three main actions:
Assigning a new government task force to regulate cryptocurrency markets, with a view to making the United States the centre of digital financial technology innovation
Building a governmental reserve of crypto assets, with the purpose of centralising, securing, or maximising their value
Prohibiting US agencies from establishing, issuing and promoting CBDCs in the US and abroad
DAS is a major policy initiative, reminiscent in certain respects of President Nixon’s 1971 decision to untie the dollar from gold. If pursued consistently over the years – something we regard as uncertain – it may change the face of the US monetary and financial sector with profound, probably adverse, implications for the dollar’s international role.
We focus on a key objective of DAS: promoting the development and use of dollar-based stablecoins. Exchanged on blockchains like cryptocurrencies such as Bitcoin, stablecoins are pegged to remain close in value to the US dollar. Though not offering a clear enhancement on the existing payment infrastructure, if actively promoted, stablecoins could end up replacing, fully or partly, traditional payment instruments settled and overseen by the central bank. If so, the Fed’s oversight function and monetary control mechanism would be weakened. Since stablecoins oscillate in value, though normally by small amounts, and are at risk of runs due to their uncertain backing, the unicity of the dollar as unit of account would also be jeopardised, and the possibility of runs also adds a source of financial instability.
Concern has been expressed that the promotion of dollar-backed stablecoins may threaten Europe’s “monetary sovereignty”. Monetary sovereignty is seen as depending on two conditions:
dominant use of the domestic currency for transactions and contract denomination
existence of effective monetary policy instruments
Neither of these conditions would be endangered by a greater diffusion of dollar-denominated stablecoins, unless either of two situations materialise:
the euro area (or parts of it) “dollarises”; or
euro-backed stablecoins replace traditional payment instruments overseen and settled by the central bank.
We suggest ways in which the legal tender status of the euro and the EU crypto markets regulation (MiCA) could be adjusted to contain these risks. In addition, the risk of stablecoins weakening financial stability in the US makes the monitoring by regulators of European institutions’ exposure to foreign shocks more relevant than it already is.
It has been argued that the digital euro in preparation at the ECB would protect Europe’s monetary sovereignty against DAS or other risks. We tend to disagree.
“Dollarisation”, an exceedingly unlikely outcome, especially if the euro’s legal status is properly established, would not in any case be prevented by the digital euro: an instrument constrained by design to be in small supply and whose commercial success is uncertain.
Merits and drawbacks of the digital euro remain actively debated on other grounds; in our view, a wholesale version of it would be beneficial. However, protecting monetary sovereignty does not add significantly to the balance of arguments for or against a retail digital euro as currently planned.
Ignazio Angeloni
Ignazio Angeloni is a part-time professor at the European University Institute in Florence and a Senior Policy Fellow at the Leibniz Institute for Financial Research SAFE in Frankfurt.
Ignazio holds a degree from Bocconi University and a Ph.D. in Economics from the University of Pennsylvania and has published books and articles in leading academic journals.
He is an IEP@BU fellow.
Cédric Tille
Member of the faculty of the Geneva Graduate Institute since 2007. He previously worked as an economist at the International Research Function of the Federal Reserve Bank of New York. He has been a member of the Bank Council of the Swiss National Bank since 2011. His research interests cover several dimensions of the international transmission of economic cycles and policies: financial globalization and its impact on the international transmission of macroeconomic fluctuations, the international role of some currencies, the dynamics of balance of payments and the value of international assets and liabilities. PhD, Princeton University.
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The IEP@BU Management Council
Catherine De Vries, IEP@BU President
Daniel Gros, IEP@BU Director
Sylvie Goulard, IEP@BU vice-President, Professor of Practice in Global affairs at SDA Bocconi School of Management
Silvia Colombo, IEP@BU Deputy Director
Carlo Altomonte, Associate Professor at Bocconi University and Associate Dean for Stakeholder Engagement Programs at SDA Bocconi School of Management
Arnstein Assve, Professor in Demography at Bocconi University
Valentina Bosetti, professor of Environmental and Climate Change Economics at Bocconi University
Elena Carletti, Dean for Research and Professor of Finance at Bocconi University
Eleanor Spaventa, Professor of European Union Law at Bocconi Law School
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