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The European Central Bank (ECB) is pushing forward with its initiative to integrate blockchain-based transactions into the financial system, marking a significant step in Europe’s digital asset strategy.
The Eurosystem, comprising the ECB and national central banks of Eurozone countries, has unveiled a two-track approach to enable settlements of distributed ledger technology (DLT)-based transactions in central bank money, according to an announcement on Thursday.
The first track focuses on an interoperability link between blockchain transactions and TARGET Services, the ECB’s real-time gross settlement (RTGS) system. This step aims to ensure that financial institutions can securely settle transactions in central bank money while leveraging the benefits of DLT. A concrete timeline for this implementation is expected to be announced soon.
The second track envisions a long-term integrated solution that would allow DLT-based transactions to be settled directly in central bank money, potentially extending beyond the Eurozone to facilitate international transactions such as foreign exchange settlements.
ECB Executive Board member Piero Cipollone, who is overseeing the initiative, emphasized that the approach balances innovation with financial stability. “We are embracing innovation without compromising on safety and stability,” Cipollone stated. “This is an important contribution to enhancing European financial market efficiency through innovation.”
Strategic Push Against US Stablecoin Dominance
The ECB’s decision to accelerate its blockchain initiative is partly motivated by concerns over the growing dominance of US dollar-backed stablecoins in global finance. European regulators worry that widespread adoption of these assets could increase US influence over the European financial system, potentially undermining the euro’s role in digital payments.
Cipollone previously warned that the expansion of US-backed digital assets across Europe could erode the region’s financial sovereignty. If transactions continue shifting toward the US dollar instead of the euro, it could weaken Europe’s ability to control its monetary policy and financial infrastructure.
While the EU pushes forward with blockchain-based central bank payments, it also remains a global leader in crypto regulation. The Markets in Crypto-Assets (MiCA) regulatory framework, introduced last year, provides clear guidelines for digital asset issuance, trading, and compliance across the bloc. Major crypto firms, including OKX and Crypto.com, have already secured MiCA-compliant licenses, reinforcing the EU’s structured approach to digital finance.
