TLDR
- ECB leaders opposed plans to ease rules for euro stablecoin issuers during EU talks Friday.
- Bruegel suggested lighter reserve rules and possible ECB funding access for regulated European stablecoin firms.
- Central bankers said stablecoins could move deposits from banks and raise funding costs for lenders.
- Bruegel warned strict EU rules could push crypto activity toward dollar-backed tokens outside Europe instead.
- The ECB favors tokenised bank deposits and continues work toward a digital euro in 2029.
Reuters reported that the European Central Bank rejected proposals to support wider euro stablecoin issuance. The debate places euro tokens beside the digital euro plan and Europe’s search for payment autonomy. Officials are weighing innovation against bank funding, rate control, and reserve safety.
ECB Pushes Back on Euro Stablecoin Support
The discussion took place at an informal meeting of EU finance policymakers in Nicosia on Friday. Bruegel economists presented a paper that urged lighter rules for euro stablecoin issuers. They also raised possible access to ECB funding for firms issuing regulated tokens. The meeting brought finance ministers and central bankers into the same debate.
Christine Lagarde and other central bankers opposed the proposal, according to the Reuters account. They warned that broad euro stablecoin use could drain bank deposits. That shift could make banks rely on costlier funding, so lending may become harder. Their position showed clear doubts about changing rules before wider testing.
Central bankers also questioned the idea of an ECB safety line for stablecoin companies. Several asked whether the central bank should become a “lender of last resort” for them. That role normally belongs to regulated banks, not crypto firms. They did not support treating token firms like banks in a crisis.
Why the ECB Sees Risks for Banks
Stablecoins work by taking user money and placing reserves with an issuer or linked bank. Therefore, money can move away from normal bank accounts faster than before. At scale, officials fear this could make deposits less steady during market stress. Banks use these deposits to fund loans for households and businesses.
The ECB also worries about its control over interest rates. Central banks guide rates partly through banks and money markets. If stablecoins grow quickly, that channel could become harder to manage. Rate moves then reach companies and consumers through loan and savings prices.
Bruegel warned that strict EU rules may strengthen “digital dollarisation” instead. The paper said activity could move toward dollar tokens and offshore markets. Central bankers at the meeting played down that concern, Reuters reported. They argued that safeguards must come before a bigger euro token market.
The ECB has not rejected all uses of stablecoins. Officials accept that tokens can lower some cross-border payment costs. However, they resist support that could turn private coins into public risk.
Rules, Market Share and the Digital Euro
EU rules for crypto assets have applied since 2024 under MiCAR. They require stablecoin issuers to hold large reserves in deposits and liquid assets. The European Commission is reviewing the rulebook as policymakers compare it with US rules. Officials are watching whether reserve rules push issuers outside the bloc.
Stablecoins remain mostly tied to the US dollar, despite strong use in Europe. Bruegel cited Artemis data showing stablecoin supply rose about one third last year. Euro stablecoins still made up only 0.3% of global supply. That gap has fueled concern about the euro’s role in digital payments.
The largest euro token, Circle’s EURC, ranked twentieth in the world, Reuters reported. Europe-based stablecoin transactions made up 38% of global transactions in late 2025. EU ministers said work on the digital euro would continue, with a 2029 launch target. Banks have also raised worries about deposit shifts linked to the digital euro.
Lagarde has instead pointed to tokenised bank deposits as a safer route. Those products would keep money within banks while adding faster digital features. EU ministers said they would keep working on the digital euro toward 2029.
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