Stablecoins, rare earths, AI: the challenges requiring update to EU strategies

Brussels – Artificial intelligence, rare earths, and then stablecoins. This is the list of the most immediate challenges, and the eurozone’s economics and finance ministers find themselves having to work on each of the three items in new ways. “Strategies have to be updated based on the events of the last year,” confides one European official. In a changing world, the EU and its single-currency countries must also keep pace, adapt, and reshape their lines of action and intervention. 

The meeting of the  Eurogroup scheduled for this week (12 November) is intended to serve as a starting point for a new common policy on issues seen as central to the future, over which there is little control today. One example of this is the rapidly developing cryptocurrency sector, with international partners increasingly willing to use it. Such is the case in the United States, where the current president Donald Trump intends to ride the wave of technological advancement in payment systems. Bitcoin is a payment system already in widespread use, but it is a volatile virtual currency and therefore insecure. Stablecoins, on the other hand, are considered to be more stable in terms of value, exchange rates, and purchasing power. That is why it is being decided to support them, at least in the US. 

The choices taken across the Atlantic first and foremost nail the Europeans to their physiological lags. “In the US, there is no fragmentation in payment methods as we have in the EU, and there are no problems of strategic autonomy,” acknowledges the same EU source, who draws attention to a single market still to be built. 

The European Commission and the European Central Bank are working on a digital euro project, intended to replace circuits such as Visa or Mastercard for transactions between Europeans in the EU, and are looking for ways out on stablecoins, to date a puzzle and a source of concern. They should not be allowed without international rules: this is the line taken to date, but in light of what is happening in the rest of the world and what its partners are doing, the EU and its euro area cannot stand idly by. 

In addition to issues related to the completion of the single market, fragmentation, missing legislation, and infrastructure to be developed, Brussels recognises that “there is the question of the role that stablecoins play in society.” Faced with an increasing use of this payment method, action is needed to control new ways of regulating transactions to ensure compliance with competition rules, security, and tax obligations. That is why there is concern within the eurogroup and a need to take stock of the situation to update agendas.