The President of the European Central Bank spoke against EUR-pegged stablecoins at the inaugural Banco de España LatAm Economic Forum today.
European Central Bank President Christine Lagarde spoke out against the development of EUR-pegged stablecoins in a speech earlier today, May 8, at the inaugural Banco de España LatAm Forum in Spain.
Lagarde argues that stablecoins perform two distinct functions: a monetary one, extending a currency’s global reach, and a technological one, enabling settlement in tokenized financial markets. In her speech, the ECB President said that conflating functions would lead Europe toward the wrong solution.
On the monetary side, Lagarde argued that EUR stablecoins aren’t an efficient way to increase euro dominance:
“If we want to strengthen the international appeal of the euro, stablecoins are not an efficient way of doing so.”
She argued that the risks to financial stability and monetary policy transmission outweigh any short-term gains, pointing to USDC’s brief depeg during the 2023 Silicon Valley Bank collapse as an example of risk to financial stability.
On the technology side, Lagarde expressed skepticism toward making stablecoins, which she also referred to as “private liabilities,” the foundation for transaction settlement. What’s needed, she argued, is public infrastructure:
“Instead, we must build the public infrastructure that will enable alternative instruments, such as stablecoins and other forms of tokenised money, to operate within a framework anchored by central bank money.”
Lagarde acknowledged the efficiencies of using blockchain, referred to in the speech as DLT (distributed ledger technology), especially for tokenization, arguing that the technology is “reshaping monetary demand and transforming settlement infrastructure.”
Instead of stablecoins, the ECB President refers to a future in which “central bank money is available natively on-chain,.” While the speech doesn’t explicity refer to a central bank digital currency (CBDC), the wording appears to be referring to something similar, a wholesale central bank settlement layer available natively on distributed ledgers, via the ECB’s Pontes and Appia projects. In that setup, private instruments like stablecoins and tokenized deposits operate on top of a central bank anchor rather than replacing it.
The speech lands as dollar-denominated stablecoins continue to overwhelm their euro rivals. As The Defiant reported, euro-pegged stablecoins ended 2025 at just 0.18% of total stablecoin supply, even as the broader market crossed $310 billion.
MiCA, which brought a broad crypto regulatory framework to the EU, including for stablecoins, reshaped the European market but didn’t close the gap with dollar tokens.
Friday’s remarks from the ECB President extend a running ECB concern: the bank has previously warned about stablecoins threatening financial stability, arguing that a loss of confidence in stablecoin redemptions could trigger a fire sale of reserve assets and destabilize the U.S. Treasury market.
This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.
