Has Trump Gifted America’s ‘Exorbitant Privilege’ to Europe?

The Digital Euro has everything that a private Stablecoin or Digital Yuan will not have, writes Raghav Bahl.

With a dead Digital Dollar, and a spooky Digital Yuan, are we condemned to a world of fuddy-duddy 20th century fiat currencies? No, there’s a new kid on the block–the Digital Euro!

(Photo: Aroop Mishra/The Quint)

I have a thumb rule about WhatsApp (WA) forwards. If I get it from a credible source, I simply read it. If I get the same message from two groups within a day, I confidently forward it to a few other groups who I believe would benefit from it. But if I get the same message thrice from three high-impact groups within an hour, I know it’s either a big fake, or a high-velocity piece of news. 

On 17 March 2025, I got this WA forward from four groups in a matter of minutes. I knew I had to dig deeper here:

The People's Bank of China suddenly announced that the digital RMB cross-border settlement system will be fully connected to the ten ASEAN countries and six Middle Eastern countries, which means that 38 percent of the world's trade volume will bypass the SWIFT system dominated by the US dollar and directly enter the "digital RMB moment".

While the SWIFT system is still struggling with the 3-5 day delay (sic) in cross-border payments, the digital currency bridge developed by China has compressed the clearing speed to 7 seconds. In the first test between Hong Kong and Abu Dhabi, a company paid a Middle Eastern supplier through digital RMB. The funds no longer went through six intermediary banks, but were received in real time through a distributed ledger, and the handling fee dropped by 98 percent.

Today, 87 percent of countries in the world have completed the adaptation of the digital RMB system, and the scale of cross-border payments has exceeded 1.2 trillion US dollars. While the United States is still debating whether digital currency threatens the status of the US dollar, China has quietly built a digital payment network covering 200 countries. 

My first instinct was to check if it’s fake or over-hyped Chinese propaganda. ChatGPT told me it’s not. China has made massive strides in developing the Digital Yuan, piloted in over 26 cities and 260 million wallets. As against this, America, or rather, US President Trump, has shelved the Digital Dollar via Executive Order 14178, outsourcing this critical evolution to private Stablecoins.

Just by the way, President Trump’s family owns a large digital corporation which issues Stablecoins (one among a few others). I had analysed the impact of this crazy move in an earlier piece.  

Digital Yuan Will Stun, Not Conquer 

So, will Digital Yuan sweep the world?

I think the euphoria needs to be tempered. While it’s a sophisticated technical product, it falters on the soft features. Simply put, it’s completely under the Chinese government’s surveillance. It’s euphemistically called “controlled anonymity”.

Expectedly, the entire data set of large transactions can be accessed by the state, ostensibly to catch fraud or tax evasion or money laundering or suspicious social behaviour. But even small offline transactions—ie, directly from one phone to another, via Bluetooth or another mechanism, without going through the public ledger—are ultimately sucked into the central database as soon as the phone is connected to the network.  

Ironically, China has killed the single most attractive feature of a digital currency, viz that it provides cash-like anonymity as digital tokens jump directly from one wallet to another on a large blockchain.

Under China’s rules, the Digital Yuan is as prone to surveillance as a fiat yuan moving though a thickly regulated network of traditional banks. The advantages of speed and lower costs are preserved, but privacy is thoroughly compromised.  

Worse, the existing infirmities of the yuan will also get vested in its digital avatar. Both will be non-convertible, and subject to quotas & controls. This will get compounded because collateral markets like bonds and equities are also relatively shallow and intrusively regulated.

So, the Digital Yuan will flourish where China has coercive power, eg domestically and with smaller countries belted together under an expensive infrastructure umbrella. But for the free world, it’s likely to be a limited starter. 

With a dead Digital Dollar, and a spooky Digital Yuan, are we condemned to a world of fuddy-duddy 20th century fiat currencies?

No, there’s a new kid on the block from, hold your breath, the has-been, old, slow, and slothful continent of Europe — the Digital Euro!

Digital Euro’s ‘Exorbitant Privilege’ — Snatched or Gifted?

The European Central Bank (ECB) wants small, offline payments to remain as traceless as cash. A peer-to-peer transfer from one device to another, directly via Bluetooth, will only get stored locally on the two devices. It will not enter the network nor get accessed by any authority. 

Even for large deals, the ECB will eschew any oversight, either via collecting data or monitoring transactions. Private intermediaries will conduct know-your-customer (KYC) and anti-money laundering checks. The political philosophy is unambiguous—there will be complete and total protection of individual rights and privacy. 

Critics will say, “Fine, the euro may be as democratic and transparent as the dollar, but will the Digital Euro have the same acceptance?”

The answer to this question would have been hazy if the Digital Dollar was around to compete with the Digital Euro. But Donald Trump has obliterated the Digital Dollar, making it a battle between the Digital Euro and privately issued Stablecoins (to repeat, one of which has been created by a Trump family-owned company!).

Think about it. The Digital Euro has everything that a private Stablecoin or Digital Yuan will not have:

• The Digital Euro will be backed by a solid group of 27 sovereign countries, ie the European Union (EU), giving it unquestioned political legitimacy.

• Today, the euro is as freely convertible as the dollar, a feature which will get grafted on the Digital Euro.

• The EU is the largest trading bloc on Planet Earth; its bond and capital markets are deep and highly liquid.

• Even today, the euro accounts for a respectable 20 percent, or $2.5 trillion, of global reserves. Against this, the dollar has 57 percent, or $7.2 trillion. But once the world moves over to digital currencies, and there is no Digital Dollar, won’t dollar-seeking investors be tempted to switch to Digital Euros (assuming, of course, that EU will pounce on this opportunity with concomitant reforms)? 

So, the world of finance is witnessing an unusual spectacle. Once written off, Europe could now revive! Because it would have snatched America’s “exorbitant privilege”, ie the power to “print” (create digital tokens of) the world’s reserve currency and assets.

Postscript: Did I say “snatched”? Perhaps I should have said “gifted by American President Trump”.