The European Central Bank refuses to relax regulations on euro stablecoins due to concerns about increasing financing costs and interfering with interest rate control
The European Central Bank (ECB) rejected the proposal to relax regulations on euro stablecoins, believing that such measures are too risky and could undermine financial stability and the transmission of monetary policy.Bruegel suggested at the informal meeting of EU finance ministers held in Nicosia, Cyprus, that liquidity requirements for stablecoin issuers should be lowered and that they should be allowed to access ECB funding support when necessary to combat a market dominated by dollar stablecoins and to avoid "digital dollarization." However, officials, including central bank president Lagarde, strongly opposed this, arguing that stablecoins could destabilize bank deposits, increase banks' funding costs, weaken lending capacity, and interfere with interest rate control.Although 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 GENIUS Act passed in the U.S. in 2025 adopts more lenient rules. Currently, euro stablecoins account for only 0.3% of the global stablecoin supply, while Europe is advancing the digital euro project to enhance payment sovereignty.
