ECB's Lagarde is sceptical of euro stablecoins
- On Friday, European Central Bank President Christine Lagarde expressed skepticism regarding euro-pegged stablecoins, arguing they could impede the ECB's operational capacity. She stated, "The case for promoting euro-denominated stablecoins is far weaker than it appears."
- Lagarde warned that USD-pegged stablecoins control nearly 90% of the market, creating systemic risks to Europe's financial system. She cited the Silicon Valley Bank collapse, where Circle's USDC briefly de-pegged, as evidence of potential instability.
- Qivalis, a consortium of 12 European banks including ING, BBVA, BNP Paribas, Danske Bank, and UniCredit, plans to launch a private digital euro later this year. Qivalis CEO Jan-Oliver Sell said this addresses dollarization risks to Europe's sovereignty.
- Policy divergence emerged as the European Commission and France argue euro stablecoins could boost the euro's international status, whereas Lagarde favors tokenized deposits and a digital euro by 2029. The disagreement reflects competing visions for Europe's monetary infrastructure.
- European regulations already mandate that stablecoin issuers hold at least 30% of reserves in bank deposits, with the remainder in low-risk instruments. Future efforts will likely anchor tokenized money within a central bank framework to mitigate systemic risks.
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ECB's Lagarde’s digital euro warning: Why Europe shouldn’t just copy the U.S. stablecoin model
Lagarde warned that large stablecoins like Tether and USDC, which now dominate a $310 billion market, pose financial stability risks and could transmit stress to underlying asset markets during periods of turmoil.
ECB President Lagarde has once again expressed her sceptical views on so-called Euro-Stablecoins.
Stablecoins linked to the euro can exacerbate financial crises, says the President of the European Central Bank, Christine Lagarde.
The President of the ECB today questioned the need to replicate instruments developed elsewhere, in a reference to cryptocurrencies ‘stablecoins', even denominated in euro, stating that they may entail risks to financial stability and obstruct the transmission of monetary policy. During her intervention in an act organised by the Bank of Spain, Christine Lagarde challenged the current that, in the face of the hegemony of the United States with t…
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