US President Donald Trump’s executive order number 14178 has not caused the general outrage that many others have. However, it has certainly attracted attention in the financial world. With the decree, the US President wants to ‘strengthen American leadership in digital financial technology’. Digital assets, blockchain and related technologies from the USA are to be disseminated internationally. Is the digital euro the European answer to this announcement?
The background to the decree is the shift of more and more transactions in the financial sector and beyond into the digital space: distributed ledgers such as blockchains now enable the secure transfer of assets directly via the network. Instead of just sending information digitally for conventional systems, such as online banking, digital assets or digital money are transferred in encrypted data packages themselves, such as software or photos.
Progress lies in the creation of a ledger that enables the transaction to be traded, executed, paid for and stored on the same platform. Transaction times are reduced and payments can be triggered automatically with smart contracts. The systems would be available 24 hours a day, 7 days a week, 365 days a year. According to an analysis by the Global Financial Markets Association, the new infrastructure could save around 15 – 20 million dollars a year worldwide.
This technology has the potential to ‘revolutionise the financial markets,’ predicts EU Finance Commissioner Maria Albuquerque. ‘The structure of financial mediation’, which has remained largely unchanged for centuries, would be “fundamentally transformed”, analyses Piero Cipollone, Director at the European Central Bank. This transformation is not just theoretical; it is starting now. And indeed, according to the recently published Deka Digital Assets Monitor (BZ of 4 February 2025), the issuance of tokenised securities in Germany alone multiplied six-fold from 2022 to 2023.
In this new digital world, President Trump now wants to secure American supremacy, as is the case in the traditional world. With the dominance of crypto assets issued in the US, such as Bitcoin or stablecoins like USDC, the conditions are certainly favourable for creating a digital US monopoly in digital money too. But where does Europe stand?
When it comes to wholesale transactions with digital financial assets, Europe has – perhaps surprisingly – become a global pioneer in the slipstream of public attention. The EU and national legislators created the necessary legal conditions for this at an early stage.
Successful tests
In successful trials organised by the ECB, 50 purely digital transactions with 60 participants worth over 500 million euros were carried out last year. This has encouraged the ECB to make the infrastructure for this permanently available in two stages (BZ of 14 February 2025), i.e. even before the digital euro sees the light of day for consumers.
In the USA, however, blockchain-based transactions cannot be paid for with central bank money. This is because the creation of a digital dollar is explicitly ruled out in the aforementioned executive order. This opens up a digital transaction space in which the euro can develop without competing with the dollar. After all, it is unlikely that the private stablecoins propagated by Trump will replace central bank money for these transactions as a ‘de facto digital dollar’. Instead, a digital euro could step into the breach. The news agency Reuters commented on the executive order: ‘Trump’s ban on a digital dollar gives China and Europe’s digital central bank money free rein.’
This opens up a completely new and previously unimagined opportunity for European financial centres, and in particular for Frankfurt as the origin of the digital euro, to reposition themselves globally. Utilising this opportunity requires not only the rapid provision of the digital euro for wholesale transactions, but also an active approach to the new technologies by market players across the board.
translated by deepl.com
Source (German): Börsen-Zeitung 27.02.2025
Secondary publication rights obtained by Börsen-Zeitung