The European Central Bank (ECB) warned about the risks of issuing euro stablecoins — they could reduce bank lending and complicate interest rate control. Reuters reports this citing sources

The concern was triggered by a note from the Brussels-based think tank Bruegel. The authors of the document proposed:

easing liquidity requirements for issuers;
considering access to ECB funding;
supporting the development of the European stablecoin market, which is currently dominated by dollar coins.

The idea was presented on May 22 at a meeting of financial officials in Nicosia. According to the agency, the initiative immediately faced resistance from regulators, including ECB President Christine Lagarde.

The agency believes that the spread of stablecoins could weaken the stability of bank deposits. When a token is issued, user funds are transferred to the issuer’s accounts and cease to be a stable source of funding for banks.

The mass transfer of funds into stablecoins would also accelerate disintermediation, complicate fundraising, and limit banks’ ability to issue loans, regulators fear.

Earlier in May, Lagarde already expressed criticism of euro stablecoins, instead supporting tokenized bank deposits. In her view, they combine the reliability of traditional accounts with the speed and programmability of distributed ledger technology.

The Dollar in Europe

Bruegel warned that stricter regulation of stablecoins in the EU compared to the US could push activity outside the bloc and strengthen “digital dollarization.”

Several central banks downplayed this risk. Some again called for enshrining a ban on the redemption of stablecoins issued both in the EU and the US in European legislation. They believe this could put pressure on the reserves of local issuers.

The European Commission is currently reviewing the MiCA regulation, which will come into effect in 2024. It requires stablecoin issuers to hold a significant portion of reserves in bank deposits and other liquid assets.

Reuters journalists noted that the law GENIUS Act, passed in the US in 2025, sets more lenient requirements and aims to support the global role of the dollar through regulated USD tokens.

According to Artemis, cited by Bruegel, the supply of stablecoins grew by about a third over the year — to $300 billion.

Meanwhile, tokens pegged to the euro account for only 0.3% of the total supply. The largest among them — EURC from Circle — ranks about 20th by market capitalization among “stablecoins.”

At the same time, Europe accounted for 38% of global stablecoin transactions in the fourth quarter of 2025.

Recall that in April, the ECB signed agreements with three European payment standardization organizations for the digital euro.

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