European Central Bank faces Bundesbank critique as BIS pushes central‑bank support for stablecoins

The German Bundesbank has renewed its criticism of the European Central Bank, arguing that the ECB’s crisis‑driven actions risk fiscal dominance and blur the line between national responsibility and shared European liability. It warns that the current degree of economic integration should be wound down and that responsibility for debt defaults must remain with individual member states, while also noting the paradox that euro‑area stability may ultimately require deeper shared sovereignty.

At the same time, the Bank for International Settlements warned that stablecoins cannot operate safely without central‑bank backing. BIS Deputy Head Gaston Gelos highlighted three structural flaws—limited redeemability, insufficient elasticity, and constrained liquidity—and warned that widespread stablecoin adoption could undermine credit supply and the transmission of monetary policy. The BIS recommends tighter regulation of stablecoins and the possible integration of digital‑token features into central‑bank frameworks to avert systemic risk.