European Central Bank President Christine Lagarde has warned that stablecoins could create significant risks for the banking system and weaken the effectiveness of monetary policy, renewing concerns about the rapid growth of digital assets tied to traditional currencies.
Speaking at the Banco de España LatAm Economic Forum in Spain, Lagarde said euro-denominated stablecoins may appear attractive because they could reduce financing costs and strengthen the euro’s international role. However, she argued that the long-term risks outweigh the short-term benefits.
Lagarde stated that widespread adoption of stablecoins could weaken the ECB’s ability to transmit interest-rate decisions through the financial system. She also warned that large-scale shifts of deposits from commercial banks into stablecoins could undermine banking-sector liquidity and increase financial instability during periods of market stress.
The ECB president pointed to previous market disruptions as evidence of potential dangers, including the temporary de-pegging of USD Coin during the 2023 U.S. banking crisis following the collapse of Silicon Valley Bank. According to Lagarde, such incidents demonstrate that stablecoins are vulnerable to runs and sudden losses of confidence.
Lagarde also expressed skepticism about proposals to promote euro-backed stablecoins as a way to increase the global influence of the euro. She said Europe should instead focus on deeper capital-market integration and the development of a digital euro supported by central bank infrastructure.
Her comments come as several European banks and financial institutions explore blockchain-based payment systems and tokenized financial products. Some policymakers in Europe have argued that euro stablecoins could help compete with the growing dominance of U.S. dollar-backed digital currencies such as USDT and USDC.
The debate over stablecoins has intensified globally as regulators attempt to balance financial innovation with concerns about systemic risk, consumer protection, and monetary sovereignty. Central banks worldwide, including the ECB, are increasingly studying central bank digital currencies as a potential alternative to privately issued stablecoins.
Source: Patronlar dünyası/ Prepared by: İlayda Gök