Joachim Nagel, president of the Deutsche Bundesbank, Germany’s central bank, has called on Europe to take “decisive measures” to boost its economic self-reliance in the light of increasingly strained relations with the United States. To support this effort, he backed the European Union’s proposed central bank digital currency (CBDC), the digital euro, and euro-denominated stablecoins.
Speaking at the New Year’s Reception of the American Chambers of Commerce Germany, held in Frankfurt on Monday, Nagel said EU officials were “working hard” toward the introduction of a retail CBDC, while also suggesting Euro-denominated stablecoins could contribute to “making Europe more independent in terms of payment systems and solutions.”
After covering a range of topics related to EU-U.S. relations, including the importance of trade, the mutual stock of direct investment, and the increasingly “shaky” transatlantic partnership, Nagel veered on to what he perceived as priorities for the EU and its central banks going forward.
“The European Union’s recent political agenda places significantly more emphasis on Europe’s strategic priorities,” said the Deutsche Bundesbank president. “We in Europe have to take decisive measures to boost our economic dynamics.”
Nagel narrowed this broad goal down to three specific measures. First, simplifying regulations in the EU to enhance the competitiveness of the European economy, including digital solutions that work across the Eurozone. Second, more investment in energy and digital infrastructure, especially renewables and artificial intelligence, and third, the EU should “channel efforts into supporting the international role of the euro.”
On this latter matter, Nagel emphasized that the Eurosystem was working hard to introduce the digital euro as a retail CBDC for payments.
“This will be the first pan-European retail digital payment solution, based solely on European infrastructures,” he said.
In addition, he said that more “exploratory work” has been underway on the possible introduction of a wholesale CBDC as well, which would allow financial institutions to make programmable payments in central bank money.
These efforts were framed by the ongoing tension with the U.S. under President Donald Trump, who has described the EU as a “foe” on trade and imposed tariffs on the bloc. This international falling out has resulted in a push from the EU for greater independence and economic resilience.
With this in mind, Nagel also made a pitch for boosting euro-denominated stablecoins, painting it as a practical move, “as they can be used for cross-border payments by individuals and firms at low cost.”
On top of escalating diplomatic tensions, it seems likely that this euro drive is also motivated by the overwhelming global dominance of U.S. dollar-denominated stablecoins—in keeping with the long term dominance of the U.S. dollar generally—and a booming stablecoin sector that reached a total market capitalization of over $300 billion in December 2025, and saw a Citi (NASDAQ: C) report from October predict it will achieve a $1.9 trillion valuation by the end of the decade.
Whatever the reasons, the influential German central bank appears to be increasingly throwing its substantial weight behind both a euro CBDC and euro stablecoins, suggesting momentum may be picking up steam toward these assets finally being realized.
Digital euro progress
The EU and European Central Bank (ECB) have been working on the digital euro since 2021, with the ECB being the driving force behind the project.
The process has been slow, largely due to legislative feet-dragging from the EU parliament. However, last September, ECB executive board member Piero Cipollone hailed a “major breakthrough,” after EU finance ministers agreed on a framework for customer holding limits, a key feature for controlling usage and safeguarding bank deposits.
“The discussion at the level of member-states is going very well,” he said. “The middle of 2029 could be a fair assessment.”
This was followed, in October, by the ECB announcing seven companies with whom it signed framework agreements for various digital euro components and services. Specifically, for alias lookup, risk and fraud management, app and software development kit, offline solution, and secure exchange of payment information.
Most recently, earlier this February, the ECB issued a call for experts to participate in two workshops focused on the role of technical service providers in supporting market readiness for the digital euro.
This represented further progress, but the ECB was still keen to reiterate that “the final decision on whether to issue a digital euro will be taken only once the relevant EU legislation has been adopted.”
Watch: Richard Baker on engineering a smarter financial world with blockchain
Source: https://coingeek.com/germany-central-bank-backs-stablecoins-cbdc-amid-us-tension/
