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Italy’s economy minister, Giancarlo Giorgetti, has voiced a strong opinion: US policy on stablecoins is a greater danger to Europe’s economic independence than even trade tariffs.

Speaking at a financial event in Milan this Tuesday, Giorgetti reiterated his concerns that the widespread use of dollar-backed stablecoins globally is chipping away at the European Union’s (EU) ability to control its own monetary policy. Notably, these comments come as President Donald Trump is shifting policy to undo some of the stricter crypto regulations put in place during Joe Biden’s presidency.

Dollar-Dominated Stablecoins: A Looming Problem for the EU

Stablecoins pegged to the US dollar are becoming increasingly common not just for crypto trading, but also for everyday transactions. They allow users to seamlessly move funds across borders between traditional and digital currencies. This ease of use is further amplified by the many crypto exchanges operating within Europe, all under the regulatory umbrella of the Markets in Crypto Asset Regulation (MiCA) laws.

Giorgetti warned that the convenience, perceived safety, and borderless nature of these stablecoins make them particularly attractive to people throughout the Eurozone.

“Everyone’s focused on the impact of trade tariffs lately,” Giorgetti pointed out to the audience. “But, in my view, the new US approach to cryptocurrencies, especially dollar-linked stablecoins, poses an even greater threat.”

He elaborated that stablecoins give individuals a way to invest in assets that feel safe and are widely accepted, all without needing a traditional US bank account.

Fragmented Payments Undercut the Need for a Digital Euro

Giorgetti also addressed the EU’s currently disjointed payment systems and urged European institutions to find solutions to help the euro become a stronger global reserve currency. He praised the European Central Bank’s (ECB) work on developing a digital euro, seeing it as a crucial step to boost the EU’s financial independence.

The digital euro project aims to allow EU residents to hold accounts directly with the ECB, making everyday transactions—like online shopping, in-store purchases, and sending money to friends—easier and more streamlined.

“The digital euro is essential to ensure European citizens don’t have to rely on foreign options for something as basic as making payments,” Giorgetti stated.

However, some European banks are concerned that the digital euro could draw customer deposits away from traditional banks and into ECB-controlled digital wallets, potentially destabilizing the region’s financial system.

US Tariffs Still Cast a Shadow on the ECB’s Economic Outlook

Following the recent tariff increases announced on “Liberation Day” April 2nd, many economists anticipate the ECB will lower its key interest rate to 2.25% this Thursday. This potential rate cut is seen as a move to support the Eurozone economy, which is facing headwinds from trade-related disruptions and wider global economic uncertainty.

Typically, tariffs are expected to weaken a country’s currency by decreasing demand for its exports, leading to higher import costs and inflation. Surprisingly, despite economists’ predictions, the euro has actually strengthened since Trump’s tariff announcement.

Eurostat data showed the euro holding steady just under $1.14 on Tuesday, trading near its highest point since late January 2022. The EUR/USD exchange rate did dip slightly by 0.0034, or 0.30%, to 1.1317, down from 1.1351 in the previous trading session.

Bank of France Governor François Villeroy de Galhau called the euro’s unexpected strength “probably the biggest surprise in the market reaction,” suggesting it could actually help to moderate inflation within the Eurozone.

Inflation Slowing but Economic Growth Remains Weak

The latest data from the European Commission website indicates that the Euro area’s inflation rate was 2.2% in March, a slight decrease from 2.3% in February 2025. Since 1991, the average inflation rate in the region has been around 2.23%, peaking at 10.6% in October 2022 and reaching a historic low of -0.6% in July 2009.

Analysts at Morgan Stanley anticipate that the ECB’s upcoming statement will maintain a cautious outlook, emphasizing that current interest rates are still restrictive.

“This is not the time to declare an end to the easing cycle,” they noted in a message to clients.

Other external factors, such as falling oil and natural gas prices, have also contributed to easing inflationary pressures. Furthermore, economists believe that Chinese exporters, facing the impact of US tariffs, will likely lower their prices to stay competitive in other markets, including Europe.

Even with potential price adjustments from China following recent discussions between European Commission President Ursula von der Leyen and Chinese Premier Li Qiang, the EU expects continued downward pressure on inflation within the Eurozone.

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Source: cryptopolitan.com