ECB pushes back on euro stablecoin proposals, citing financial stability risks
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The ECB warned EU finance ministers that expanding euro stablecoin issuance could weaken bank lending and complicate monetary policy.
Key facts
Europeans conduct 38% of global stablecoin transactions, yet euro-denominated tokens account for 0.3% of total supply, per the policy paper
The Bruegel authors warned that stricter EU rules compared to the US risked accelerating digital dollarization, pushing activity outside the bloc
ECB President Christine Lagarde led the resistance, warning that stablecoin issuance makes bank deposits less stable by transferring buyers’ funds to issuers’ accounts
The ECB warned EU finance ministers that expanding euro stablecoin issuance could weaken bank lending and complicate monetary policy
Summary
The European Central Bank warned EU finance ministers on Friday that proposals to expand euro stablecoin issuance could weaken bank lending and complicate monetary policy, according to three sources cited by Reuters. The pushback came in response to a policy paper prepared by Brussels-based think tank Bruegel, whose authors presented their proposals at the two-day informal meeting of the Economic and Financial Affairs Council in Nicosia, Cyprus. Europeans conduct 38% of global stablecoin transactions, yet euro-denominated tokens account for 0.3% of total supply, per the policy paper. The question at the heart of the Nicosia meeting was whether Europe wants to close that gap badly enough to extend central bank-style support to stablecoin issuers.