Nine of Europe’s top banks, including UniCredit and ING, said that they are creating a new business to launch a euro-denominated stablecoin. The Amsterdam-based venture will roll out its stablecoin in the second half of next year.

Based on information made public, the new company’s name founded by the European banks has not been publicly disclosed yet. The articles cite that a CEO would be appointed “soon” and that the consortium has incorporated a new company in the Netherlands. It is intended to be licensed and regulated by the Dutch Central Bank as an e-money institution under the EU’s Markets in Crypto-Assets Regulation (MiCAR).

The focus of the launches has been on the stablecoin itself and banks participating in the project behind the venture are ING, UniCredit, DekaBank, Banca Sella, KBC, Danske Bank, SEB, Caixabank, and Raiffeisen Bank International.

Euro-denominated stablecoins are meant for quick, low-cost payments and settlements, and to be used in digital payments and cross-border transactions. It will provide a “trusted, regulated solution for on-chain payments” and allow Europe’s “financial sovereignty.”

The global market of stablecoins is driven primarily by U.S. dollar-pegged tokens, which account for nearly $300 billion in issuance. In contrast, euro-denominated stablecoins are insignificant, occupying just about $620 million.

The action comes even as the European Central Bank (ECB) has been dovish on stablecoins, and ECB President Christine Lagarde has issued a warning that they pose the risk of disruption to monetary policy and financial stability. The ECB is currently pushing for the launch of a digital euro, a central bank digital currency (CBDC).

While private stablecoins are issued and collateralized by private institutions, a central bank digital currency (CBDC) would be a digital form of a nation’s official currency, issued and controlled by the central bank. Resistance to the introduction of a digital euro has been seen from some commercial banks. The banks’ stablecoin project is considered an alternative to the U.S.-dominated stablecoin market, providing a European digital currency solution before a digital euro, which isn’t expected before mid-2029.

Societe Generale’s cryptocurrency arm, SG-FORGE, launched a euro-stablecoin in 2023, but it hasn’t found widespread usage.

It appears EU banks do not like the digital euro or would rather be first to demonstrate digital cryptocurrency. Banks’ motives appear to be both not liking the digital euro and a need to be first in the market of digital currency.

Why Banks Don’t Want the Digital Euro

Commercial banks have raised serious issues about the European Central Bank’s (ECB) plans for a digital euro.

Their biggest concerns are:

• Financial Disintermediation: The banks fear that a digital euro would experience a massive withdrawal of deposits from bank accounts to digital euro wallets. That would reduce their source of funding for lending and other financial activities, and it could destabilize the banking system. The ECB has attempted to ease this by proposing limits on the quantity of digital euro one can hold, but the banks remain concerned.
• Business Model and Competition: A free minimum digital euro would directly compete with banks’ existing payment services and products. Banks would provide the digital euro and retain customer-facing operations but fear that they will be forced to do so with no solid business case.
• Loss of Influence: The digital euro is a project of the central bank, giving the ECB greater direct control of the financial system. Banks fear a system that would diminish their role as the leading intermediaries between the public and the central bank.

Why Banks Are Launching Their Own Stablecoin

Nine European banks’ choice to issue their own euro-denominated stablecoin is a tactical step that solves their problems and capitalizes on a chance. It is a means of them:

• Get Ahead of the Curve: The digital euro is several years away from a potential launch, with no release anticipated before mid-2029. By launching a stablecoin in the second half of 2026, the banks will be able to enter the digital payments space much sooner and establish a presence.
• Counter U.S. Dominance: The stablecoin market is dominated by dollar-pegged tokens, which account for approximately 99% of the market. The banks perceive this as a challenge to Europe’s “strategic autonomy in payments.” Their stablecoin initiative is an immediate response, with the aim of providing a “real European alternative” and strengthening the international status of the euro in the digital economy.
• Control: Contrary to a centrally governed digital euro by the ECB, the stablecoin consortium guarantees that control is in the hands of the participating banks. They can offer value-added services like custody and digital wallets without permitting the customer relationship or revenues to leave the banking space.
• Comply with Regulation: The new company will look to be regulated and overseen as an e-money institution by the EU Markets in Crypto-Assets Regulation (MiCAR). This provides a clear, regulated setting where their stablecoin is able to move with an immense benefit over unregulated crypto assets.

It is not that the EU banks dislike an electronic currency, but rather that they would prefer one which they can own and profit from, and not a central bank electronic currency which they fear will upset their existing business model. The stablecoin project offers them the chance to forge the future of electronic payments in Europe on their own terms.