ECB’s Lagarde Pushes Back on Euro Stablecoins, Warns of ‘Structural Weaknesses’
ECB President Christine Lagarde rejected the idea that euro-backed stablecoins are an effective way to enhance the euro’s global standing, calling stablecoins structurally weak and financially destabilizing. She argued that deeper integration of European capital markets and a stronger base of safe euro assets are better solutions. Lagarde warned that stablecoins, as private liabilities, can face sudden redemption risks and threaten monetary policy transmission by drawing deposits out of banks, a key risk in the bank-centric European system. She referenced incidents like the near-depegging of USDC during the 2023 Silicon Valley Bank collapse as evidence of stablecoins’ fragility. Critics argue that the U.S. regulatory push toward dollar-based stablecoins is cementing dollar dominance, and warn that Europe’s hesitance could limit the euro’s relevance in digital finance. Nonetheless, Lagarde insisted Europe should not copy the U.S. approach but focus on its own infrastructure, noting recent steps toward open standards for digital euro payments to reduce reliance on foreign-controlled systems.
