Joachim Nagel, President of Germany’s central bank, the Deutsche Bundesbank, has expressed support for the development of a euro-pegged central bank digital currency (CBDC) alongside euro-denominated stablecoins for payment use cases.

Joachim Nagel, the President of the Deutsche Bundesbank, Germany’s central bank, has voiced his endorsement for creating a central bank digital currency (CBDC) linked to the euro, as well as euro-based stablecoins for payment applications.

In remarks prepared for a speech at the New Year’s Reception of the American Chamber of Commerce in Frankfurt, Nagel stated that European Union policymakers are actively advancing efforts toward launching a retail CBDC. He also emphasised that euro-based stablecoins could strengthen Europe’s autonomy in payment infrastructure and financial solutions.

Nagel noted that a wholesale CBDC could enable financial institutions to execute programmable transactions using central bank money. Additionally, he acknowledged the potential advantages of euro-denominated stablecoins, particularly for facilitating low-cost cross-border payments for both individuals and businesses.

These remarks come after US President Donald Trump approved legislation to create a regulatory framework for payment stablecoins in the United States. The bill is likely to go into force within 18 months of signing, or 120 days after implementing rules are finalised. This approach could hasten the global adoption of US dollar-pegged stablecoins, potentially competing with future euro-based digital currency ventures.

Although Nagel’s recent address emphasised the benefits of stablecoins, he has previously warned about their vulnerabilities. Speaking at a Euro50 Group meeting last week, he cautioned that a dominant market presence of US dollar-denominated stablecoins may seriously threaten domestic monetary policy and European financial sovereignty.

Stablecoin Yield Debate Continues in the US

Meanwhile, lawmakers in Washington, along with White House officials, have been consulting with representatives from the banking and cryptocurrency sectors ahead of a possible Senate vote on the CLARITY Act. The proposed legislation aims to create a comprehensive regulatory framework for digital assets. However, disagreements remain, particularly regarding provisions related to stablecoin rewards and yield mechanisms, which are still under discussion.

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