The European Central Bank has strongly criticized plans to artificially stimulate the euro stablecoin market. The regulator warned EU finance ministers that the expansion of digital assets could undermine traditional bank lending and disrupt the mechanism for managing interest rates.
This confrontation was sparked by a report from Brussels-based think tank Bruegel, presented at an informal meeting of EU financial regulators in Cyprus. To challenge the dominance of the dollar in the cryptocurrency market, the authors proposed radical measures, including relaxing liquidity requirements for stablecoin issuers and granting them direct access to ECB funding.
ECB President Christine Lagarde and representatives from European central banks have voiced strong opposition to this initiative. In Frankfurt’s view, the primary threat lies in the potential capital flight from the traditional financial system.
The risk mechanism is straightforward. When a stablecoin is issued, the buyer’s real money is transferred to the accounts of the issuing company. This practice strips traditional banks of their main resource: a stable deposit base.
Regulators worry that a mass influx of funds into tokens could accelerate disintermediation, effectively removing banks from the intermediary chain. As a result, funding costs for credit institutions would rise sharply, loan issuance volumes would plummet, and the ECB would lose its leverage over market interest rates.