US Dollar: Stablecoin shifts and Euro challenge – Rabobank

Rabobank’s Global Strategist Michael Every highlights United States (US) legislative moves on US Dollar (USD) stablecoins via the CLARITY and GENIUS Acts, stressing how reward structures could entrench Dollar-linked digital assets in global finance. Every contrasts this with the European Central Bank's (ECB) scepticism on Euro (EUR) stablecoins and notes that a stronger EUR role would require deeper capital markets and a larger safe-asset pool, not just payments innovation.

US stablecoins versus Euro alternatives

"Meanwhile, a revolution may be taking place in the geoeconomic sphere. The CLARITY Act working its way through the US Congress as companion to the GENIUS Act that cements stablecoins into the financial system has disallowed USD stablecoins from paying interest; however, it allows the payment of scaled rewards and fees that are their functional equivalent when used in transactions."

"That might prove pivotal for these much-misunderstood new assets designed to steamroller the global Eurodollar financial architecture."

"By contrast, the ECB has just stated stablecoins are not an efficient way to strengthen the international role of the euro vs. deeper capital market integration and a stronger safe asset base."

"That means its alternative to the USD is an EUR that looks more like it, which implies the matching ‘benefits’ of trade deficits, debt, and financialisation over net exports and the industrial production needed for remilitarisation – as the US tries to pivot hard the other way."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)