The ECB and stablecoins

In the ECB blog post From hype to hazard: what stablecoins mean for Europe, Jürgen Schaaf, an adviser in the ECB's market infrastructure and payments area, puts dollar stablecoins at about 99 percent of total stablecoin market capitalization and euro stablecoins below 350 million euros. Market analysts he cites expect US stablecoin supply to grow from 230 billion dollars in 2025 to 2 trillion by the end of 2028.

Two risks follow for the euro area. Interest-bearing stablecoins could draw deposits from banks, which fund most of their lending with deposits. And wide use of dollar stablecoins could weaken the ECB's control over monetary conditions, as in dollarized economies. An ECB working paper, reported by The Block, found that stablecoin adoption can shift deposits away from banks and that dollar-pegged tokens could import US monetary conditions into the euro area.

A multi-issuer scheme is a stablecoin issued jointly by an EU entity and a non-EU entity, with tokens that are legally identical and reserves split across both places. The European Systemic Risk Board adopted Recommendation ESRB/2025/9 on these schemes. In a run, holders outside the EU could redeem from the EU issuer, where MiCA forbids redemption fees, and leave EU holders exposed. The ESRB asked the European Commission to treat such schemes as not permitted under MiCA, and otherwise asked authorities for safeguards, most of them by the end of 2026.

The same blog post supports properly regulated euro stablecoins, designed to high standards and with effective risk mitigation. Next to them the ECB places the digital euro for payments at the point of sale, and settlement of tokenized assets in central bank money through its Pontes and Appia work. For banks, the ECB has pointed to tokenized deposits, which carry the credit quality of regulated institutions.

The ECB has its seat in Frankfurt, where Finance Loop is based; the ECB in Frankfurt page describes its place in the financial center. Finance Loop is strategic partner of the Digital Euro Association, whose Digital Euro Conference brings speakers from central banks, commercial banks and fintechs together on the digital euro and stablecoins. At Capital & Code, with Finance Loop as media partner, the Bundesbank debates central bank money against tokenized deposits and stablecoins.

The ECB sees risks for bank funding and monetary sovereignty, mainly from dollar stablecoins. It supports well-regulated euro stablecoins and wants the digital euro and settlement in central bank money next to them.

Tokens issued jointly by an EU company and a company outside the EU, with identical tokens and reserves in both places. The ESRB asked the Commission not to treat them as permitted under MiCA.

The digital euro would be central bank money for everyday payments, while a stablecoin is a claim on a private issuer. The stablecoin vs CBDC answer compares the two.