The European Central Bank (ECB) has warned of the risks associated with issuing euro stablecoins, stating they could reduce bank lending and complicate interest rate control. This was reported by Reuters, citing sources.
Concerns were sparked by a memo from the Brussels-based think tank Bruegel. The document’s authors proposed:
- easing liquidity requirements for issuers;
- considering access to ECB funding;
- supporting the development of the European stablecoin market, currently dominated by dollar coins.
The idea was presented on May 22 at a meeting of financial officials in Nicosia. According to the agency, the initiative immediately faced resistance from regulators, including ECB President Christine Lagarde.
The institution believes that the spread of stablecoins could weaken the resilience of bank deposits. When a token is issued, users’ funds are transferred to the issuer’s accounts, ceasing to be a stable funding source for banks.
A mass shift of funds into stablecoins could also accelerate disintermediation, complicate fundraising, and limit banks’ lending capabilities, regulators fear.
Earlier in May, Lagarde had already criticized euro stablecoins, instead supporting tokenized bank deposits. In her view, they combine the reliability of traditional accounts with the speed and programmability of distributed ledger technology.
The Dollar in Europe
Bruegel warned that stricter regulation of stablecoins in the EU compared to the US could push activity outside the bloc and increase “digital dollarization.”
Several central banks downplayed this risk. Some again called for enshrining in European legislation a ban on redeeming stablecoins issued both in the EU and the US. They believe this could pressure local issuers’ reserves.
The European Commission is currently reviewing the MiCA regulation, effective from 2024. It requires stablecoin issuers to hold a significant portion of reserves in bank deposits and other liquid assets.
Reuters journalists noted that the GENIUS Act, adopted in the US in 2025, sets more lenient requirements and aims to support the global role of the dollar through regulated USD tokens.
According to Artemis, cited by Bruegel, the supply of stablecoins grew by about a third over the year to $300 billion.
However, euro-pegged tokens account for only 0.3% of the total supply. The largest among them, EURC by Circle, ranks around 20th in market capitalization among “stable coins.”
Meanwhile, Europe accounted for 38% of global stablecoin transactions in the fourth quarter of 2025.
Back in April, the ECB signed agreements with three European organizations on payment standards for the digital euro.