- ECB President Christine Lagarde argued that promoting euro-denominated stablecoins is not the optimal path for strengthening the euro’s international role.
- She separated stablecoins’ monetary and technological functions, highlighting risks like financial instability and weaker monetary policy.
- Instead of replicating U.S. dollar-backed stablecoins, Europe should build tokenized financial infrastructure anchored by central bank money.
- Key European initiatives include the Pontes project for wholesale settlement and the Appia roadmap for an interoperable tokenized finance ecosystem.
On Friday, European Central Bank President Christine Lagarde, speaking at the Banco de España LatAm Economic Forum in Spain, pushed back against calls for euro stablecoins as a response to U.S.-led initiatives. She contended that the debate conflates two distinct functions of stablecoins—monetary and technological—which should be evaluated separately.
On the monetary side, she acknowledged that regulated euro stablecoins could generate global demand for euro-area safe assets. However, this comes with clear trade-offs including financial stability risks and potentially weaker monetary policy transmission. Lagarde pointed to the 2023 Silicon Valley Bank collapse, when Circle’s USDC briefly fell below its peg, as a stark example of how quickly confidence can erode.
Consequently, she emphasized that the technological benefits of stablecoins are not unique. Other forms of tokenized money, including central bank money, could perform the same role within distributed ledger systems. “The answer […] does not lie in rejecting technology or discouraging stablecoins altogether,” Lagarde stated.
Instead, she outlined the European strategy to build public infrastructure anchored by central bank money. This includes the Eurosystem’s Pontes project for wholesale settlement and the Appia roadmap for a fully interoperable European tokenized finance ecosystem by 2028. Lagarde concluded that Europe’s task is to build foundations that serve its own objectives without importing fragilities from elsewhere.
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