Key Notes

Key Notes:

The European Central Bank (ECB) is set to launch a unified payment system powered by blockchain to enable financial institutions to settle transactions using central bank money.Executive board member Piero Cipollone emphasizes balancing innovation with security, aiming to create a more unified European financial ecosystem.Europe’s proactive stance through MiCA regulation contrasts with US regulatory uncertainty, despite increasing US stablecoin adoption trends.

The European Central Bank (ECB) is gearing up for a major financial transformation, with plans to roll out a unified payment system powered by blockchain technology. The ECB aims to establish this system to enable financial institutions to settle transactions using central bank money, referring to the Central Bank Digital Currency (CBDC).

To achieve its goal, the ECB has outlined a two-track approach for integrating blockchain into its payment infrastructure.

According to the ECB, the first track involves the development and implementation of an interoperability link between blockchain-based transactions and TARGET Services, the existing European real-time gross settlement (RTGS) system. This would allow financial institutions to settle transactions in central bank money using distributed ledger technology (DLT), ensuring security and efficiency.

The second track focuses on a more integrated, long-term solution for settling DLT-based transactions directly in central bank money. ECB said that this broader initiative will extend beyond the Eurozone and include international financial operations such as foreign exchange settlements.

The bank explained that the primary goal of the upcoming system is to strengthen the European financial economy against external influences while fostering innovation in digital payments.

The initiative will be handled by Piero Cipollone, an executive board member at the ECB. According to him, while the bank is open to exploring new technologies, it will not compromise on consumer protection.

“We are embracing innovation without compromising on safety and stability. This is an important contribution to enhancing European financial market efficiency through innovation. Our approach will pay due attention to the Eurosystem’s goal of achieving a more harmonised and integrated European financial ecosystem,” he said.

Meanwhile, a specific timeline for the rollout of the system is yet to be announced.

The ECB’s efforts to introduce a unified payment infrastructure for banks and other financial institutions come amid the United States’ growing push for stablecoin adoption under President Donald Trump’s administration.

European regulators are increasingly concerned that the expansion of US dollar-backed stablecoins could further entrench American dominance in the global financial economy.

A few weeks ago, Cipollone warned that the widespread use of US-backed digital assets across Europe could weaken the region’s ability to control its financial infrastructure. The ECB board member said that as more transactions are settled in US dollars rather than euros, Europe risks losing monetary sovereignty.

While the EU fears that the US dollar could dominate the euro in digital payments, Europe remains miles ahead of America in terms of crypto regulation. Last year, the EU introduced its landmark regulatory framework known as the Markets in Crypto-Assets (MiCA) regulation.

This framework aims to provide a comprehensive set of rules for digital asset issuance, trading, and services, ensuring consumer protection, market integrity, and transparency. Under MiCA, crypto companies operating in the EU must obtain proper licensing, comply with anti-market abuse measures, and adhere to strict operational guidelines.

So far, companies like OKX and Crypto.com have already secured MiCA-compliant licenses, allowing them to operate legally across the 27-member bloc.

Meanwhile, the United States is still grappling with a lack of clear regulations for the crypto economy. Despite calls from major industry players like Coinbase urging lawmakers to introduce a comprehensive regulatory framework, progress has been slow.

However, the Trump administration recently issued an executive order directing the newly formed crypto group to review existing laws and establish a federal strategy for regulating digital assets.

Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.

Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.

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