ECB Adviser: Support Euro Stablecoins to Counter Dollar Threat

An adviser from the European Central Bank (ECB), Jürgen Schaaf, has called for more support for regulated euro stablecoins in response to rising interest in stablecoin initiatives out of the United States. He outlined these views in a recent blog post, stating that euro stablecoins could work alongside the digital euro project to help protect Europe’s control over its own currency.

Schaaf indicated that stablecoins can complement the digital euro, while a central bank digital currency (CBDC) would help maintain Europe’s monetary sovereignty. He noted that the ECB is making progress on using distributed ledger technology (DLT)—a form of digital record-keeping for transactions—in financial market settlements using central bank money. According to Schaaf, “increased use of distributed ledger technology (DLT) in wholesale financial markets is critical to maintaining relevance in the future financial infrastructure.”

While the blog post welcomed regulated private-sector payment tools, Schaaf spent much of the article warning about stablecoin risks. He stressed that the post reflected his personal opinion and was not an official ECB stance. The post listed several dangers linked to the growing use of stablecoins beyond just digital assets, particularly the risk that U.S. dollar-based stablecoins could challenge the euro’s dominance.

Currently, the digital euro has not received final approval, and no draft law has been published for it since the new European Parliament sessions began in mid-2024. Schaaf said that the risk to Europe’s monetary authority from stablecoins is mostly limited in retail payments and savings, especially under the European Union’s MiCA law. This regulation restricts interest payments on stablecoins in the EU and blocks large-scale use of non-euro stablecoins for payments.

For savings, Schaaf noted that EU residents are unlikely to move money to U.S. dollar stablecoins in pursuit of higher interest, as MiCA rules bar service providers and stablecoin issuers from offering interest—unlike some structures allowed in the U.S. through the GENIUS Act. He added that moving funds to offshore or DeFi (decentralized finance) platforms remains risky and inconvenient for most users. EU investors also currently have access to higher yields on dollar holdings through regulated money market funds.

However, the post singled out tokenized money market funds—where funds are converted into digital tokens for easier trading—offered by firms like France-based Spiko. These products are gaining popularity with businesses due to better rates than EUR-denominated bank accounts. Although the U.S. dollar is a common currency for these tokenized funds, Spiko’s euro-denominated fund is used more often.

Schaaf highlighted another area of concern: the use of stablecoins for interbank payments and securities transactions, which often involve delivery versus payment (DvP) settlement. These uses are not restricted by MiCA, creating gaps where non-euro stablecoins might pose a risk to the financial market’s stability and the euro’s role. Yet, since the ECB is focusing on wholesale CBDC and DLT projects for these purposes, officials might view these risks as manageable.

Schaaf concluded that through strict regulation, investment in digital financial infrastructure, and further innovation in digital currencies, “the euro could emerge from this period of change as a stronger currency.” For additional details, see his full blog post, From hype to hazard: what stablecoins mean for Europe.

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