US policy on stablecoins is way more dangerous than tariffs – Italy’s Economy Minister

Italy’s economy minister, Giancarlo Giorgetti, says US policy on stablecoins is a bigger threat to European economic sovereignty than trade tariffs.

Speaking at an asset management event in Milan on Tuesday, he reiterated that the global influence of dollar-denominated stablecoins undermines the European Union’s (EU) monetary independence. President Donald Trump has made policy changes to reverse the regulatory crackdowns on crypto introduced during former President Joe Biden’s administration.

Dollar-dominated stablecoins will negatively impact the EU

US-dollar pegged stablecoins, now used for more than crypto trading, help holders make cross-border transactions between crypto and fiat currencies. This is also supported by the presence of several crypto exchanges that operate in Europe governed by the strict Markets in Crypto Asset Regulation (MiCA) laws. 

Giorgetti cautioned that their ease of use, perceived safety, and cross-border capabilities make them especially appealing to citizens across the eurozone.

“The general focus these days is on the impact of trade tariffs. However, even more dangerous is the new US policy on cryptocurrencies and, in particular, that on dollar-denominated stablecoins,” Giorgetti told attendees.

He propounded that stablecoins allow individuals to invest in assets that are perceived as low-risk and acceptable without a traditional US bank account. 

Fragmented payments stifle the need for digital euro

Giorgetti talked about the fragmented EU payment infrastructure and asked European institutions to find ways to help the euro grow into Europe’s reserve currency. He commended the European Central Bank’s efforts to develop a digital euro, which he believes could improve the EU’s fiscal independence.

The digital euro project could allow residents of EU member states to hold accounts directly with the ECB and service everyday transactions like online purchases, in-store payments, or peer-to-peer transfers.

“The digital euro will be essential to minimize the need for European citizens to resort to foreign solutions to access such a basic service as payment,” Giorgetti reckoned.

Still, some European banks worry the digital euro could divert customer deposits away from commercial banks and into ECB-controlled wallets, causing the region’s financial stability to crumble.

ECB still faces economic headwinds from US tariffs

After the April 2 “Liberation Day” tariff hikes, economists believe the ECB will cut its interest rate to 2.25% this Thursday. The central bank could lower rates to help the eurozone economy stay afloat after being hit by trade-related shocks and global economic turmoil.

Tariffs are always expected to weaken a nation’s currency by reducing export demand, which would boost import prices and inflation. Surprisingly, rather than weakening, the euro has strengthened after Trump’s tariff announcement, contrary to economists’ expectations.  

According to Eurostat data, the euro held steady just below the $1.14 threshold on Tuesday, trading near its highest level since late January 2022. The EUR/USD pair slipped by 0.0034, or 0.30%, to 1.1317, down from 1.1351 in the previous session.

Bank of France Governor François Villeroy de Galhau described the euro’s unexpected resilience as “probably the biggest surprise in the market reaction,” saying that it could help curb inflation in the eurozone.

Inflation goes down, but economic growth is sluggish

The latest data from the European Commission website places the euro area’s inflation rate at 2.2% in March, down from 2.3% in February 2025. On average, inflation in the region has stood at 2.23% since 1991, with a peak of 10.6% recorded in October 2022 and a historic low of -0.6% in July 2009.

Morgan Stanley analysts predict that the central bank’s upcoming statement will maintain its cautious tone and explain that current rates are still restrictive. 

“This is not the time to call an end to the easing cycle,” they wrote in a client note.

Other external factors, including declining oil and natural gas prices, have lowered inflationary pressures. Moreover, economists see that Chinese exporters affected by US tariffs will reduce prices to remain competitive in other markets, including Europe. 

Even if China exercises pricing restraint following recent discussions between European Commission President Ursula von der Leyen and Chinese Premier Li Qiang, the bloc expects pressure on eurozone inflation to continue deflating.

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