European Central Bank President: Euro stablecoins pose risks to the banking sector and monetary policy

According to Bloomberg, ECB President Lagarde stated that even euro-denominated stablecoins pose risks to financial stability and the transmission of monetary policy, questioning the necessity of introducing such tools.

She pointed out that while euro stablecoins could lower financing costs in the euro area and enhance the global appeal of the euro, the costs are significant and outweigh short-term benefits. Lagarde emphasized that if the goal is to enhance the international appeal of the euro, stablecoins are not an effective means. She referenced a working paper from the ECB in March, which warned that the widespread adoption of stablecoins would pose significant risks to euro area banks and monetary sovereignty. She stated that Europe's task is not to "replicate tools developed elsewhere" and continues to push for the introduction of a digital euro.