In a latest development, European Central Bank board member Piero Cipollone stated that euro zone banks need a digital euro to counter U.S. President Donald Trump’s promotion of stablecoins, which are typically pegged to the U.S. dollar.

Notably, Trump said he would promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide as part of a broader crypto strategy outlined in his executive order on Thursday.

As per a report from Reuters, Cipollone explained that Trump’s focus on promoting stablecoins worldwide could draw more customers away from traditional banks, weakening their business by reducing fees and clients. He emphasized that this makes the case stronger for the European Central Bank (ECB) to launch its own digital currency, the digital euro, as a response to this growing trend.

Banks are worried that a digital euro could lead customers to move their money into ECB-backed wallets, draining their funds. The European Central Bank is still testing how a digital euro would work, but a final decision on whether to launch it will be made once European lawmakers approve legislation on the matter.

Meanwhile, Trump’s executive order also blocks the Federal Reserve from issuing its own central bank digital currency (CBDC).

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