The Daily Peg
DeFi protocols are facing a USDC liquidity crisis.
Editorial hello
Apologies for the absent note the past two days, but I got bogged down in longer form work. This has now been published on our sister site The Blind Spot. It will be cross-posted here shortly.
I did manage to find time to catch Nicolas Veron of the Peterson Institute interviewing the ECB’s Piero Cipollone. As noted on X, the highlight came when Veron got Cipollone to admit that some element of the alarmist rhetoric in Brussels about the US cutting off European payment systems in a fit of economic fury may be being encouraged to move digital euro legislation through parliament more quickly.
The dialogue went as follows:
Veron: “Did the geopolitical risk assessment that the unlikely but not completely implausible scenario in which the American card service providers withdraw service as they did in Russia indeed in 2022… (and) tell me if I'm wrong, but my impression is that the ECB has been increasingly explicit over the last few years, especially in the last two years, about this geopolitical motivation?”
Cipollone: “You are right, but with some nuances. First of all, we’ve been saying this because we need to fix our internal problem. There cannot be a system where citizens cannot rely on infrastructure that is not European, for something that is so basic as payments. So this is something that we should have fixed anyway… You might ask why we started only few years ago, in 2020? That’s because before that cash was king. The real change has been how digital payments have accelerated, and therefore marginalised cash. That's why this need to provide something additional became so important.
Now, we have been consistent in saying this. But the point that you were making, the geopolitical risk, this is resonating much more with politicians and that's where we saw some acceleration from the political side to put this project into focus. I must confess that before, this was a slow-moving project, at least at the legislative level. Then what happened in the last three/four years, it provided a sort of acceleration, mostly on the political side. We obviously use this to explain how concrete this risk could become, but again, we are not doing this against someone. We are doing this to fix our internal problem.”
Cipollone also appears to believe that the overall cost of using the digital euro will be much cheaper for European merchants than using Visa or Mastercard.
Have a lovely weekend.
Back on Monday like usual.
