Christine Lagarde, President of the ECB, questioned the necessity of issuing European stablecoins to protect monetary sovereignty. Speaking at an economic forum in Spain, she stated that the risks of such assets outweigh their potential benefits.
Lagarde identified two main threats.
- Financial instability. Stablecoins are private liabilities. She cited the example of USDC in 2023, when the asset lost its peg to the dollar due to issues at Silicon Valley Bank.
- Impact on the banking system. A mass shift of depositors from bank deposits to stablecoins would weaken banks’ ability to lend to the economy and complicate inflation control.
According to the ECB President, stablecoins are popular merely because they are more convenient than traditional interbank transfers. However, Europe does not need to replicate the American model.
Instead of private stablecoins, the ECB is focusing on state infrastructure:
- Pontes project: will enable blockchain settlements directly in central bank money;
- Appia roadmap: aims to create a unified European ecosystem for tokenized assets by 2028.
Lagarde emphasized that integrating capital markets and developing a digital euro will be more beneficial than trying to catch up with the US in issuing private tokens. She concluded that having a state “anchor” in the form of a central bank digital currency will render the use of foreign stablecoins in Europe pointless.
Earlier in April, the Bank for International Settlements warned that many dollar stablecoins function more as investment instruments than as a means of payment.
Later, a consortium of 12 European banks announced the launch of a euro stablecoin.