Gold Rises, Buoyed by Likely Safe-Haven Demand Amid Global Trade Uncertainty
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Yahoo
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Dollar stablecoins threaten Europe's monetary autonomy, ECB blog argues
FRANKFURT (Reuters) -The dollar's early dominance of stablecoins gives the U.S. an advantage that could ultimately push up borrowing costs for Europe, reduce the ECB's autonomy and increase geopolitical dependency on the U.S., an ECB blog post argued on Monday. Stablecoins, crypto assets pegged to a currency such as the dollar, have gained popularity in recent years and got a big boost earlier this month when U.S. President Donald Trump signed a law to create a regulatory regime, aimed at cementing the dollar's status as the global reserve currency. "Such dominance of the U.S. dollar would provide the United States with strategic and economic advantages, allowing it to finance its debt more cheaply while exerting global influence," ECB adviser Jürgen Schaaf said in a post that does not necessarily reflect the ECB's own views. "For Europe, this would mean higher financing costs relative to the United States, reduced monetary policy autonomy and geopolitical dependency," he added. If dollar-based stablecoins become widely used in the euro area, for payments, savings or settlement, the ECB's control over monetary conditions could be weakened, Schaaf argued. Dollar-pegged stablecoins issued by Tether and Circle have dominated the global market and the share of euro-denominated stablecoins remains marginal, with market capitalisation of less than 350 million euros, the blog post said. Europe should thus act quickly, creating the digital version of its euro currency, a project, that is being held up by legislative delays, and should foster the creation of more euro-based stablecoins. The EU should also foster the use of distributed ledger technology to speed up cheap cross-border payments, the blog argued. "Finally, stronger global coordination on stablecoin regulation is pivotal," the blog said. "If we forgo a common approach, we risk fuelling instability, regulatory arbitrage and global U.S. dollar dominance." Sign in to access your portfolio
Yahoo
37 minutes ago
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ECB's Kazimir says big unexpected economic shift needed for September rate cut
FRANKFURT (Reuters) -The European Central Bank is not in any hurry to lower borrowing costs again and it would take a major unexpected economic shift to make a case for action in September, Slovak policymaker Peter Kazimir said on Monday. The ECB kept rates unchanged last week as widely expected and offered a moderately upbeat assessment on the bloc's economy, prompting investors to scale back their bets on further policy easing. "When it comes to incoming data, I don't expect anything significant to happen that would force my hand to act as soon as September," Kazimir said in a blog post. "It would take something like clear signs of unravelling in the labour market for me to act." This assessment aligns with comments from ECB sources that the bar for a cut in September is high after the bank has already halved rates to 2% since June 2024. Sunday's EU trade deal with the U.S. was clearly a positive since it reduces uncertainty for businesses, but the impact on prices, the ECB's chief focus, was still unclear. "This (trade deal) can help to ease concerns and regain confidence," Kazimir said. "We now have more clarity, but we will need time to see to what extent this new environment will affect inflation." Weighing in on a key debate among policymakers, Kazimir said he did not see a risk that inflation would now undershoot the ECB's 2% target, much like it did in the pre-pandemic decade. Price growth is seen dipping below 2% next year and only rebounding in 2027, raising worries among some governors that once inflation is well below 2%, expectations also fall and could perpetuate weak price growth. "I see no looming spectre of a sustained undershooting of inflation," Kazimir, an outspoken policy hawk, said. "The expected dips below target in the coming year should be temporary." He added that trade turmoil also created upside risks for inflation, particularly if global supply chains were realigned, creating bottlenecks. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
40 minutes ago
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Kazimir Sees ECB Holding Rates in September in Absence of Shock
The European Central Bank shouldn't cut interest rates in September unless there's evidence of a major deterioration in the economy, according to Governing Council member Peter Kazimir. With the deposit rate held at 2% last week, the ECB is in a 'comfortable place' to monitor trade uncertainty, the Slovak official said Monday. A deal struck between the US and the European Union is 'welcome news,' though doesn't grant an all-clear for the euro-zone economy.
