European Central Bank rejects proposals to ease euro stablecoin rules, citing bank and policy risks

The European Central Bank (ECB) warned EU finance ministers that proposals to relax liquidity and reserve requirements for euro‑denominated stablecoins could undermine bank lending and complicate monetary‑policy transmission. The objections were voiced at an informal Economic and Financial Affairs Council meeting in Nicosia, Cyprus, where the think‑tank Bruegel presented a paper urging easier rules and potential ECB funding for stablecoin issuers to help the euro compete with dollar‑backed tokens.

ECB President Christine Lagarde led the resistance, arguing that broader stablecoin issuance would accelerate disintermediation, raise banks’ funding costs and weaken the ECB’s ability to steer interest rates. Euro stablecoins account for only about 0.3% of global supply, even though Europe handles roughly 38% of stablecoin transactions. Circle’s EURC, the largest euro stablecoin, ranks around 12th‑20th worldwide.

The central bank also rejected the idea of becoming a lender of last resort for stablecoin firms, a role currently reserved for regulated banks. Instead, it favoured tokenised bank deposits and the development of a digital euro. The debate occurs as the EU reviews its Markets in Crypto‑Assets (MiCA) framework, which already requires stablecoin issuers to hold 30‑60% of reserves in bank deposits.