The ECB is concerned that US dollar stablecoins could weaken its ability to affect policy, and European issuers have ideas about how this could be solved.
Central bankers in the European Union are making the case that US dollar-backed stablecoins could be a threat to their ability to make monetary policy.
The stablecoin market has boomed over the past year, largely driven by legal certainty in the US. Each month marks a new all-time high for stablecoin market capitalization. But policymakers at the European Central Bank (ECB) are concerned about what this increased adoption of dollar-based assets could mean during a time of crisis.
Issuers of stablecoins backed by the euro and the pound recognize those risks as well, but they don’t believe that proposed solutions, like a digital euro, can provide an alternative fast enough. They also question whether a central bank digital currency is the right fit.
