European banks form company to launch euro stablecoin

A consortium of nine European banks, including ING and UniCredit, said on Thursday they are forming a new company to launch a euro-denominated stablecoin, a move that signals mainstream finance's shift to embrace digital markets.

The company will be based in Amsterdam, a spokesperson for DekaBank, another of the participating institutions, said. Its stablecoin is expected to launch in the second half of next year, the consortium said in a statement.

Stablecoins are digital tokens designed to keep a constant value and are backed by traditional currencies such as the U.S. dollar or euro. They are used in digital payments and cross-border transactions, particularly in emerging markets, and as a means of bringing stability to exchanges of volatile cryptocurrencies.


Dollar dominates stablecoin, ECB remains sceptical

The banks, who said the new tokens can be used for quick, low-cost payments and settlements, launched the initiative even as the European Central Bank voices scepticism over stablecoins.

ECB President Christine Lagarde in June told European policymakers that stablecoins posed risks for monetary policy and financial stability, and urged European lawmakers to introduce legislation backing the launch of a digital euro. Some commercial banks, however, have pushed back on the introduction of a digital euro.

In addition to ING, UniCredit and DekaBank, other banks participating in the new company include Banca Sella, KBC, Danske Bank, SEB, Caixabank and Raiffeisen Bank International.

They said that others could join the initiative, and a CEO for the company would be appointed soon.

"We are contributing to fill the need for a trusted, regulated solution for on-chain payments and settlement, paving the way for a new standard in the digital asset space that will support Europe's growth and financial sovereignty," said UniCredit head of strategy Fiona Melrose.

Societe Generale's crypto arm, SG-FORGE, launched a euro-based stablecoin in 2023, although it has not been widely adopted, with just 56.2 million euros ($66 million) in circulation, according to its website. The French bank also launched a U.S.-dollar stablecoin earlier this year.

Global stablecoin issuance, which is overwhelmingly pegged to the U.S. dollar, stands at nearly $300 billion, according to figures released last week by the Bank of Italy. Euro-denominated stablecoins totalled just $620 million, the figures showed.

That compares with global crypto-asset capitalization of $4 trillion.

($1 = 0.8513 euros)