ECB’s Lagarde’s digital euro warning: Why Europe shouldn’t just copy the U.S. stablecoin model Lagarde warned that large stablecoins like Tether and USDC, which now dominate a $310 billion market, pose financial stability risks and could transmit stress to underlying asset…
rkets during periods of turmoil. What to know: – European Central Bank President Christine Lagarde argued that Europe should prioritize building tokenized settlement infrastructure anchored in central bank money rather than promoting privately issued euro-pegged stablecoins. – Lagarde warned that large stablecoins like Tether and USDC, which now dominate a $310 billion market, pose financial stability risks and could transmit stress to underlying asset markets during periods of turmoil. – While a consortium of major European banks plans to launch a privately issued digital euro to counter “digital dollarization,” Lagarde is urging EU countries to back a central bank digital currency, with the ECB targeting a potential digital euro rollout by 2029
European Central Bank (ECB) President Christine Lagarde argued against the need for privately-issued euro-pegged stablecoins, even in the face of a market which is 98% dominated by dollar-pegged tokens. Despite the rapid global adoption of USD stablecoins, Largarde argued Europe should focus on building tokenized settlement infrastructure anchored in central bank money rather than simply replicating the U.S. stablecoin model in a speech Bank of Spain’s LatAm Economic Forum in Madrid on Friday “The case for promoting euro-denominated stablecoins is far weaker than it appears,” Lagarde said, arguing that the technological case for stablecoins can be replicated by central bank infrastructure, while their monetary function introduces unacceptable risks to financial stability. Those comments come as Qivalis, a consortium of 12 of Europe’s largest banks, including ING, BBVA, BNP Paribas, Danske Bank, and UniCredit, announced plans to launch a…