WEEKLY - digital euro, China + crypto
plus: assorted links and refreshing retro
Hello everyone! I hope you’re all doing well, and get to touch grass this weekend.
For those of you that don’t read the premium daily, this newsletter has some big news!!! A SPONSOR!! 👇👇 A big shoutout to the team at crypto data platform Allium – they provide the data and visuals for the Visa stablecoin dashboard that I often share here, and of course their full product suite goes much, MUCH deeper. It’s worth checking out. More information below.
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You’re reading the free weekly Crypto is Macro Now, where I reshare/update a couple of posts from the past few days, offer some interesting links I came across in my weekly reading, and include something from outside the crypto/macro sphere that is currently inspiring me (it’s a fascinating world out there).
Feel free to share this with friends and colleagues, and if you like this newsletter, do please hit the ❤ button at the bottom – I’m told it feeds the almighty algorithm.
🌞 Production note: this newsletter will be taking some time off over the July 4th weekend, so no publication next Saturday! If you’re also taking a break, I hope it’s refreshing, fun and the base for some good memories. 🌞
In this newsletter:
The race to the digital euro is getting tense
China and crypto
Assorted links: attention, discrimination, unknown knowledge, steel cans and more
Refreshing retro vibes
Some of the topics discussed in this week’s premium dailies:
Coming up: NATO, Powell, PCE and more
Markets don’t spook easily
Podcast recommends
The race to the digital euro is getting tense
Fiserv and “conservative” stablecoins
Macro-Crypto Bits: markets, truces, bad price data and more
The signals from NATO
The dark side of crypto
Macro-Crypto Bits: markets, consumer confidence, Powell
Signals from a political earthquake
China and crypto
Crypto comes in from the margins
Macro-Crypto bits: markets, Powell pressure, systemic cracks
BIS: Stablecoins should make way for CBDCs
Bitcoin in Bhutan
Macro-Crypto Bits: markets, PCE, GDP, rates expectations and more
The race to the digital euro is getting tense
A tinge of desperation is creeping in.
Speaking to the European Parliament earlier this week, European Central Bank (ECB) President Christine Lagarde urged lawmakers to accelerate approval of the legislation necessary to usher in the digital euro. She reportedly even said “please”.
This is revealing on two fronts:
One is that, as I’ve been saying for a while, the “study period” of two years – during which the central bank would explore the pros and cons of the digital euro while consulting with multiple groups on the potential consequences – is pure theatre. The governing committee was due to make a final decision in October of this year, and until then there was still a chance common sense would prevail and it would be scrapped; now, we have further confirmation the decision was taken a while ago.
We’re told that it’s to protect Europeans from dependence on US and Chinese payment platforms such as Visa, Mastercard and Alipay. We’re also told that it’s to prevent Europeans from becoming too dependent on the obviously unreliable US dollar. And we’re told that this is now urgent given the US push for stablecoins to extend dollar hegemony. The “nationalist” strings are being pulled, which itself carries a tinge of desperation as the EU is not exactly united on much.
But this is just the most recent version of the spin we’ve been sold over the years, starting well before President Trump’s inauguration. The “American threat” narrative feels not so much urgent as merely the latest justification.
What’s more, it’s a justification riddled with inaccuracies. In her speech this week, Lagarde reminded everyone that stablecoins “are not always able to maintain their fixed value”, which compromises their utility. In the past, there have been colossal stablecoin collapses – but similarly fragile structures are precluded in current versions of US regulation, and are certainly not the exported dollar stablecoins Lagarde seems to be afraid of. That claim is deliberately misleading.
When asked why Europeans would choose dollar stablecoins over traditional euros, she cited the high interest rates – although under US and European frameworks, dollar stablecoins won’t pay interest.
And the “potential shift in deposits… could adversely affect the transmission of monetary policy”. With impeccable timing, last week the European Parliament Think Tank published a paper demonstrating that foreign (ie. dollar) stablecoins were not a threat to European monetary integrity, and that the digital euro’s low balance limit (as yet undecided but likely to be around €3,000 to keep banks from panicking) will dampen its utility.
The second big message here is that Lagarde is frustrated by what looks like regulatory stonewalling. Lawmakers are understandably concerned. In February, the ECB Target 2 (T2) and Target 2 Securities (T2S) payments systems crashed, leaving transfers frozen for 10 hours and delaying the payment of salaries, pensions, welfare payments and financial trades. Several officials took advantage of the opportunity to publicly question whether the ECB could be trusted to run a digital euro – this has more than a pinch of political grandstanding, but it does highlight the risk in centralization.
Why the urgency now?
It could be to do with the ticking of the clock – Lagarde’s term as ECB President ends in October 2027 and cannot be renewed. She no doubt wants to have the launch as part of her legacy. Last month, reports emerged that she was considering leaving her post early to run the World Economic Forum. She has since insisted that she plans to see out her tenure, but confidence has been dented.
And the digital euro is a complex project that should not be rushed. Assuming launch is announced this October, full implementation will take time. Selection of the developers is due by the end of this month, along with the finalized architecture. But a project this deep and systemic will be tough to spin up in just four months. The announcement of the decision to go ahead does not mean systems will be ready to do so.
(timeline via the European Central Bank)
What’s more, before full launch there will need to be an extended “pilot” with limited roll-out, followed by reports, adjustments as well as more builds and integrations. So, even if the ECB hits the ground running in October (a big if), a complete EU-wide launch is probably a couple of years away, coming right up to the time Lagarde leaves her post. And the ECB can only hit the ground running if the legislation is in place.
It might not be. As I mentioned above, there seems to be some stonewalling. A digital euro framework was first proposed in 2023, and has not progressed much since. In December, Stefan Berger – the European Parliament representative responsible for steering the project through the legislative process – stepped down, citing opposition to the ECB focus on a retail CBDC. His replacement is Fernando Navarrete Rojas, who earlier this year gave a speech in the European Parliament warning of the digital euro risks, and asking deep “but whyyyyy?” questions that as far as I know have not been answered.
And all this is before some territorial legislators start to argue about who should be in charge of the project, as it is not entirely about monetary policy – it directly touches key areas outside the central bank mandate, such as private sector innovation, retail-facing applications and user privacy.
In sum, Lagarde is understandably fretting that typical European inertia will scupper her goal of inserting her central bank into the daily lives of citizens. Of going where the European Central Bank has not gone before. Of potentially changing central bank business models for the digital age, and at the same time setting the base for greater centralized control over payments of any sort.
In sum, there is still a glimmer of hope that it may not happen.
China and crypto
I’ve written before about how it appears China is warming to the idea of regulated (and observable) crypto trading, rather than continuing to pretend it doesn’t happen.
This week, we got a signal on that path: the international arm of China’s largest securities broker by asset value, Guotai Haitong (formerly Guotai Junan), has obtained a Hong Kong license to offer trading of crypto assets.
Guotai Haitong is not directly state-backed, but it is state-influenced as several state-owned enterprises own stakes in the company. The largest shareholder, for example, is an entity controlled by the Shanghai municipal government, and the original firm (Guotai Junan) was reportedly created with government involvement.
So, here we have the first large Chinese “connected” financial institution to get authorization to offer crypto services in Hong Kong. This licensing would not have been solicited without support from head office, which would not have been given if there were doubts as to the PRC’s acceptance.
For now, these services will not be available to Chinese residents, but Hong Kong is typically seen as a testbed for new types of financial services, as well as a bridge between the mainland and the international investment community. What’s more, according to state-run Securities China media (in an article with a headline translated by Google as “Virtual asset trading has set the market on fire!”), several other international divisions of large mainland brokerages have also applied for the Hong Kong virtual assets license. Slowly, but surely.
ASSORTED LINKS
(A selection of reads outside of crypto and macro, although these may find their way in anyway. I try to choose links without a paywall, but when I feel it’s worth making an exception, I specify.)
You might have seen that, earlier this week, Barclays decided that it would not allow purchases of crypto assets on its Barclaycard. Swen Werner artfully details how this move is illegal, and sketches some of the potentially heavy consequences. (Barclaycards’ Crypto Ban Cannot Be Justified Under English Law, My Digital Truth®)
Kyla Scanlon offers a characteristically original take (Trump, Mamdani, and Cluely, Kyla’s Newsletter) on the political and economic impact of attention: how it moves minds, shapes strategy, attracts money and is changing the structure of power.
Here’s a good quote:
“Succinctly… everything feels like crypto now? Crypto doesn’t represent “real” value (some things in the industry do, but broad brushstrokes), but it synthesizes it through speculation and belief. Vibes, volatility, and mindshare, if you will.”
And another one:
“Because right now, the person who can generate the most compelling speculation about the future gets the most power to create it, regardless of whether they understand the consequences.”
Sarah Constantin shares some mind-blowing details on how the mind works – for instance, you can “see” even if your visual cortex is damaged, only you don’t register that you’re seeing. Same with hearing and touch. Wild. (Making Sense of Consciousness Part 1: Perceptual Awareness, Rough Diamonds)
I’ve often fantasized about learning Russian and Japanese. For fun, of course. Yascha Mounk’s account of learning Chinese encourages me that it’s not too late, while highlighting why translation apps can’t come anywhere close to replicating the thrill of navigating new mind maps, and the insight that comes from cultural immersion. (18 Observations About Learning Chinese, Yascha Mounk)
John MacGhlionn offers some insight into why politics feels crazy and confusing, and why target groups aren’t behaving as the experts predicted: the groups’ members are tired and fed-up. I’m not a Farage supporter, more an interested observer, but I recognize the growing clamour for change. And I’d add that the reason young voters are flocking to Reform could also explain the resurgence of the Hard Left in many regions: it’s a reaction to the over-policed and ineffectual middle. (Woke Men, Broke Women: The Sexual Politics of Reform UK, Restoration)
Few of us give two thoughts on what goes into making a can of soup – this article by Ed Conway will change that, while it explains how tariffs are going to make consumer goods more expensive despite the Administration’s urging of substitution. (Tinned Soup and Tariffs, Material World)
An oddly enjoyable read about dating, I say “oddly” because the current system of apps and optimizing sounds so high-pressure and soul-less. What makes it enjoyable, perhaps, is the message that connection can’t be optimized, it either exists or it doesn’t. Then again, I say this as someone who has the good fortune to have been happily married since before the dating app era, phew. (The Work of Dating Advice, Oliver Bateman Does the Work)
The chasm between US and European culture, with the term encompassing everything from art to urban design to work ethic, is a mystifying puzzle that begs for a simple answer because then we could each adopt what we like of the other. But there isn’t one. Chris Arnade takes a stab, however, and suggests that it’s to do with our respective approaches to the “common good”, which in turn goes back to the idea of historical roots – here in Europe, we have deep ones. We’re less individualistic, by design. This leads to an emphasis on the community, and on continuity, that feeds through to café culture, local identity and helping those less fortunate. (What Makes Europe Better than America?, The Free Press – paywall)
HAVE A GREAT WEEKEND!
(in this section, I share stuff that has NOTHING to do with macro or crypto, ‘cos it’s the weekend and life is interesting)
Earlier this week, a reader (thanks Robert!) pointed me in the direction of #italodisco on X, which for some inexplicable reason had escaped my sharp scrutiny. I am enthralled, and have been thinking about why.
It’s not just the upbeat, catchy music – it’s also the comfort of nostalgia, the tug of retro innocence, the throwback to simpler times represented by two dudes vibing and grooving and drinking and smoking, and somehow making cringe fashion choices seem cool. An ode to not giving a f*ck, an uplifting contrast to the headlines of recent weeks, and a delightful segue into the hopeful freedom of summer.
I can’t figure out how to embed one of their video shorts here, so instead I’ll offer a screenshot and repeat the link:
DISCLAIMER: I never give trading ideas, and NOTHING I say is investment advice! I hold some BTC, ETH and a tiny amount of some smaller tokens, but they’re all long-term holdings – I don’t trade.