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ECB Rejects Easing Regulation on Euro Stablecoins Due to Concerns Over Financing Costs and Interest Rate Control

AirdropBlackHole
On May 23, the European Central Bank (ECB) rejected proposals to relax regulations on euro stablecoins, deeming such measures too risky and potentially harmful to financial stability and the transmission of monetary policy. At an informal meeting of EU finance ministers in Nicosia, Cyprus, Bruegel suggested lowering liquidity requirements for stablecoin issuers and allowing them to access ECB funding when necessary to combat the dominance of dollar stablecoins and avoid 'digital dollarization.' However, officials, including ECB President Christine Lagarde, strongly opposed this, arguing that stablecoins could destabilize bank deposits, increase banks' financing costs, weaken lending capacity, and interfere with interest rate control. While some finance ministers had mixed feelings about the proposal, several central bank officials questioned the idea of making the ECB the 'lender of last resort' for stablecoin issuers. The EU is currently implementing strict regulations on stablecoins under the MiCAR framework, while the U.S. is adopting more lenient rules with the GENIUS Act passed in 2025. Currently, euro stablecoins account for only 0.3% of the global stablecoin supply, while Europe is advancing its digital euro project to enhance payment sovereignty.
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