Italy Warns: US Stablecoins a Greater Threat Than Tariffs
In a powerful statement that signals rising transatlantic tensions in the financial sector, Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, has issued a stark warning: U.S.-backed stablecoins may pose a greater threat to the European Union than trade tariffs imposed by former President Donald Trump.
“While tariffs dominate headlines, stablecoin policies are an even more dangerous threat to European financial stability,” Giorgetti said during a recent event in Milan, according to a report by Reuters.
The Rising Threat of Dollar-Backed Stablecoins
U.S. stablecoins, which allow individuals—including European citizens—to conduct cross-border transactions in U.S. dollars without opening an American bank account, are increasingly attractive. Giorgetti emphasized that this quiet but significant shift could undermine the euro’s role as a dominant currency in global trade.
“The growing appeal of US stablecoins should not be underestimated,” he cautioned.
Giorgetti called upon European Union lawmakers to urgently enhance the euro’s international standing, pushing for faster development of the digital euro to counter the growing appeal of foreign stablecoins.
U.S. Advances on Stablecoin Legislation
Across the Atlantic, the United States is moving ahead with efforts to regulate its booming stablecoin market. On April 2, the House Financial Services Committee passed the STABLE Act, which aims to boost transparency and ensure that stablecoin issuers disclose how their tokens are backed.
Additionally, the GENIUS Act seeks to:
- Require 1:1 reserves for stablecoins
- Enforce Anti-Money Laundering (AML) compliance
- Strengthen consumer protection
- Reinforce U.S. dollar dominance globally
However, the GENIUS Act still needs approval from both chambers of Congress and a presidential signature to become law.
Europe's Digital Euro as a Strategic Response
In direct response to these developments, the European Central Bank (ECB) is fast-tracking its digital euro project. This central bank digital currency (CBDC) would allow EU residents to:
- Open digital wallets with the ECB
- Make online and in-store payments
- Send peer-to-peer money via European-based providers
“The digital euro will be essential to reduce reliance on foreign payment systems,” Giorgetti said.
Still, not everyone in Europe is on board. Several European banks have raised concerns that a central bank-backed digital wallet could lead to a drain on bank deposits, threatening traditional financial institutions.
A Currency Tug-of-War: Stablecoins, Tariffs, and Resilience
Despite Donald Trump’s tariff hikes announced on April 2’s “Liberation Day”, the euro has shown unexpected resilience, defying economic predictions. According to Eurostat, the EUR/USD pair was trading at 1.1317, close to its highest levels since January 2022.
François Villeroy de Galhau, Governor of the Bank of France, described the euro’s strength as “probably the biggest surprise” in market reactions.
Nevertheless, the ECB is expected to cut interest rates to 2.25%, hoping to cushion the Eurozone from trade-related shocks and further global economic turbulence.
Trump’s Crypto Pivot Raises Further Alarm
Adding fuel to the fire, President Donald Trump has promised to reverse Biden-era crypto regulations and promote a crypto-friendly environment, a move likely to further accelerate stablecoin adoption globally.
This transatlantic divergence in financial strategy and regulation underscores the urgency expressed by Giorgetti, who described the growing stablecoin trend as a strategic threat—not just a financial one.