German central bank chief sees merit in euro stablecoins, but CBDC remains in focus

German central bank president Joachim Nagel said he sees “merit in euro-denominated stablecoins,” and argues that they could serve as a cheaper and more efficient means for cross-border payments by both firms and individuals.

During his speech at the New Year’s Reception of the American Chamber of Commerce in Germany in Frankfurt, Nagel, who leads the Deutsche Bundesbank, added that the EU is “working hard on the introduction of the digital euro.”

“This will be the first pan-European retail digital payment solution, based solely on European infrastructures,” he added.

However, he did not elaborate on how euro-denominated stablecoins would be regulated within the European Union’s existing legal framework, nor clarify how they would interact with the planned digital euro or broader monetary policy architecture.

In separate comments made last week, Nagel cautioned that if US dollar-denominated stablecoins were to gain significantly larger market share than a euro-pegged alternative, European monetary policy “could be severely impaired,” and the continent’s sovereignty could be weakened.

Nagel, who has long maintained a cautious and skeptical stance toward unbacked cryptocurrencies, has instead advocated the use of a state-backed digital euro, which he believes “will play a role in future resilience” for Europe.

According to him, the central bank has already “accomplished important exploratory work on the possible introduction of a wholesale CBDC.” A wholesale CBDC, he said, would allow financial institutions to make “programmable payments” in central bank money.

Elsewhere in the U.S., there has been a lot of momentum around stablecoin, and the market has been expanding at a rapid pace on the back of demand for dollar-equivalent settlement layers, especially after President Donald Trump signed the GENIUS Act into law in July 2025.

But policy deadlock around a key market structure bill has stalled progress and divided crypto industry and banking stakeholders over issues such as stablecoin yield and reward mechanisms.