Post by Augustine Chiagozie (@pabloexchange)

ECB pushes back against support for euro stablecoins.

The European Central Bank warned that euro stablecoins could weaken bank deposits, reduce banks’ lending capacity and make interest rate control harder. The concern is that when users move funds into stablecoins, those funds shift from bank deposits to issuer accounts, reducing stable funding for the banking system.

The debate was triggered by a Bruegel proposal to support the European stablecoin market, including softer liquidity requirements and potential ECB funding access for issuers. Regulators, including ECB President Christine Lagarde, reportedly opposed the idea.

The broader concern is strategic: Europe wants to avoid “digital dollarization,” as USD stablecoins dominate the market while euro-pegged tokens represent only 0.3% of total stablecoin supply. At the same time, Europe accounted for 38% of global stablecoin transactions in Q4 2025, making the regulatory balance especially important.

Lagarde continues to favor tokenized bank deposits over stablecoins, arguing they can combine the trust of traditional banking with the speed and programmability of blockchain-based payments.

0 likes · 0 comments · 0 shares