ECB Pushes Back on Calls to Loosen Rules for Euro Stablecoins, Citing Stability Risks

May 23 — The European Central Bank has rejected suggestions to relax the EU's regulatory regime for euro-denominated stablecoins, warning that lighter rules could heighten risks to financial stability and disrupt monetary policy transmission. The push for change surfaced during an informal gathering of EU finance ministers in Nicosia, Cyprus. Think tank Bruegel proposed reducing liquidity requirements for stablecoin issuers and allowing them, in certain circumstances, to tap ECB funding. The aim would be to curb the dominance of dollar-linked stablecoins and avoid what it described as "digital dollarization." ECB officials, including President Christine Lagarde, opposed the idea. They argued that stablecoins could draw funds away from bank deposits, raise banks' funding costs, constrain lending, and complicate interest-rate policy. While some finance ministers offered mixed reactions, multiple central-bank officials questioned whether the ECB should serve as a "lender of last resort" for stablecoin issuers. The EU is currently applying strict stablecoin requirements under the Markets in Crypto-Assets Regulation (MiCAR). In contrast, the U.S. GENIUS Act, passed in 2025, takes a more permissive approach. Euro-denominated stablecoins represent about 0.3% of global stablecoin supply. Europe is also advancing its digital euro project as part of a broader effort to strengthen payments autonomy.