Central banks should have the power to curb the broad deployment of large stablecoins if regulators deem them to affect the goals of public policy. This statement was made by the chairman of the EBA José Manuel Campa, according to CoinDesk.
In his view, the initiative would help reduce risks to financial stability and monetary policy.
He clarified that his authority would oversee directly the major issuers under the Markets in Crypto Assets (MiCA) framework, which EU lawmakers adopted in April.
According to the EBA chair, the bill would allow central banks to intervene in the process of issuing new ‘stablecoins’. It would also require ceasing the issuance of a particular stablecoin if its daily transaction volume exceeds 1 million.
Campa sees a future in which this class of assets ‘will become even more relevant’ as a means of payment. However, issuers must comply with ‘reasonable constraints’, including antitrust rules and anti-money-laundering measures, he said.
The official shares the concerns voiced by the U.S. central bank about the unfettered deployment of stablecoins on decentralised platforms. He believes this could have adverse consequences for investors.
According to him, new ‘stablecoins’ would be subject to mandatory stress testing. Before approval, experts will conduct analysis of smart contracts, the issuer’s business model and the redemption mechanism.
In April, the head of the EBA emphasised the need to diversify stablecoin reserves. He urged issuing companies to address conflicts of interest and to disclose the links between custody providers and trading platforms.