Head of the European Stability Mechanism: Stablecoins lacking proper backing and management will threaten financial stability

ChainCatcher news, according to Bloomberg, a senior EU policymaker stated that stablecoins, if lacking proper backing and management, will threaten financial stability.

European Stability Mechanism (ESM) President Pierre Gramegna said in Washington on Wednesday that if stablecoins become mainstream and cannot be backed like central bank currencies, they will pose risks to the global financial system. He emphasized that it is not a matter of opposing stablecoins, but they need to operate within a framework that ensures the safety of consumers and financial participants. Furthermore, although Austrian central bank governor Martin Kocher believes that stablecoins will not be as popular in the Eurozone as in other regions, Gramegna pointed out that the EU cannot be marginalized in the cryptocurrency space. Since 99% of stablecoins are denominated in dollars, if Europe does not launch euro-denominated stablecoins, it will miss opportunities, and he believes that cash, digital currencies, and stablecoins can coexist.