By Francesco Canepa and Balazs Koranyi
FRANKFURT (Reuters) - The European Central Bank hopes U.S. President Donald Trump's plan to support cryptocurrencies pegged to the U.S. dollar will speed up legislative backing for the digital euro, ECB board member Piero Cipollone told Reuters.
The ECB has presented its digital currency - essentially an online wallet guaranteed by the central bank - in part as an electronic means of payment that does not rely on dominant U.S. providers such as Visa (NYSE:V) and PayPal (NASDAQ:PYPL).
Cipollone said Trump's support for globally available stablecoins tied to the dollar would help create yet another U.S.-made payment tool and added urgency to the digital euro project.
The European Commission proposed digital euro legislation in June 2023 but not much has happened since amid scepticism from some lawmakers and bankers.
"The political world is becoming more alert to this," Cipollone said in an interview on Wednesday. "And it’s possible that we will see an acceleration in the process."
Cipollone hoped the EU's Parliament and Council would wrap up work on the digital euro legislation before the summer, paving the way for negotiations with the Commission.
This would leave room for the new rules to be finalised by November, when ECB policymakers are set to vote on whether or not to launch the digital currency.
"Political processes are complex and there are many things on the table," Cipollone said. "Obviously the sooner the better, but we fully understand their needs."
Asked by Reuters about this timeline, EU lawmaker Markus Ferber said Parliament may at best have a report ready by the summer.
Like money market funds, stablecoins offer exposure to short-term interest rates in an official currency but they can also be used to make payments.
Cipollone said the spread of U.S. stablecoins as a means of payment was "worrisome" because it threatened to divert deposits away from European banks.
"If people in Europe start to use stablecoins to pay, given that most of them are American and dollar-based, they will be transferring their deposits from Europe to the United States," he said.
Bankers fear a digital euro would equally empty their coffers as customers transfer some of their cash to the safety of an ECB-guaranteed wallet.
To address these concerns, the ECB said holdings would likely be capped at a few thousand euros and not remunerated.
Nigeria, Jamaica and the Bahamas have already launched central bank digital currency (CBDC) and a further 44 countries, including Russia, China, Australia and Brazil are running pilots, according to the Atlantic Council think tank.
Trump, by contrast, prohibited the U.S. Federal Reserve from issuing its own CBDC.