A Digital Euro on Ethereum or Solana: Europe's Play for Monetary Sovereignty?

Recent discussions within European financial circles have centered on a potentially groundbreaking idea: launching a digital euro not on a private, controlled network, but on public blockchains like Ethereum or Solana.

The GENIUS Act and the Race for Digital Dominance

The catalyst for this shift appears to be the United States' recent passage of stablecoin legislation, informally dubbed the GENIUS Act. This law gives regulated, dollar-backed stablecoins a significant advantage in the burgeoning digital finance arena, prompting fears that the euro could be overshadowed.

According to Ram Kumar, a key contributor at OpenLedger, deploying the euro on a public chain could offer several benefits. It would provide immediate access to the crypto economy, integrate with decentralized finance (DeFi) platforms, and streamline cross-border payments without requiring the construction of entirely new infrastructure.

• Ethereum: Offers programmability and a vibrant developer community.
• Solana: Provides low fees and high transaction throughput for consumer-scale payments.

Both platforms would increase the euro's visibility beyond Europe in a way that a private ledger simply can't.

Key Concerns and Challenges

However, moving the digital Euro to a public blockchain is not without risks.

• Privacy: Public blockchains inherently conflict with the EU's GDPR framework and the desire for cash-like anonymity.
• Technical and Governance Issues: Ethereum's scalability, Solana's reliability, and the lack of direct state control over upgrades and validators are significant concerns.
• Bank Deposits: A widely accessible digital euro could potentially drain deposits from traditional banks.

The Bigger Picture

ECB executive board member Piero Cipollone has previously cautioned that U.S. stablecoins could siphon deposits from European banks and strengthen the dollar's global influence. These are very real concerns. The pressure is on for Europe to maintain financial stability and strategic autonomy.

Key Takeaways:

• Europe is considering launching a digital euro on public blockchains like Ethereum or Solana.
• The decision is driven by concerns over U.S. dominance in digital finance, particularly following the GENIUS Act.
• Public blockchains offer benefits like access to DeFi and streamlined cross-border payments but also pose privacy and governance challenges.