The Chairman of Societe Generale, Lorenzo Bini Smaghi, urges Europe to embrace stablecoins or be left behind in an opinion piece for the Financial Times. Mr Smaghi was previously a member of the Executive Board of the European Central Bank for six years.
He gave a nod to the recent report by the Bank for International Settlements that asserts that stablecoins are unsound money.
Instead, Mr Smaghi said that “stablecoins should be understood for what they are: a technological breakthrough with profound implications for the financial system. They allow for near-instant, low-cost, peer-to-peer transactions across borders, all within a decentralised infrastructure.”
From his perspective, Europe is falling behind given the tiny euro stablecoin issuance, not so much because of regulation – he acknowledged Europe’s MiCA – but culture. He particularly points the finger at fellow bankers unwilling to make the investment.
“Leadership is needed — above all from public authorities. Yet European monetary authorities remain hesitant, often due to fundamental misunderstandings,” he wrote.
He notes the enormous potential benefits of tokenization to the single market, and highlights the misconception that a digital euro, built on conventional technology, is the appropriate tool. Ultimately a failure to participate in stablecoins will enable precisely what central bankers fear most – a challenge to monetary sovereignty.
SocGen – the first systemic bank to launch a stablecoin
Given Smaghi’s strong advocacy for stablecoins, it’s worth examining whether his position might be influenced by his bank’s involvement in this space. Some will argue that Mr Smaghi is saying this because Societe Generale was the first major bank to launch a stablecoin and therefore has an advantage. While SocGen’s EURCV stablecoin has enabled it to learn ahead of others, it’s still miniscule by international standards, with an issuance of just €41 million. The fact that it was allowed to issue it so early speaks to a more open minded approach.
There’s also an argument that the significant investments required by European banks to support the digital euro, has made them more cautious about participating.
While Mr Smaghi’s piece was about stablecoins, these issues also affect other digital finance initiatives. Last week the ECB announced a DLT pilot for settlement using central bank money, a critical step. However, it was widely expected to happen this year, but will only be available in late 2026, more than five years after the same system was first trialed. In a recent opinion piece, DekaBank’s Michael Cyrus, highlights the different approach in the United States versus Europe and argues for openness over control.