ECB warns dollar stablecoins threaten eurozone monetary sovereignty
A senior official at the European Central Bank (ECB) has warned that stablecoins pegged to the US dollar pose a risk to local monetary sovereignty and financial stability in the eurozone.
The global stablecoin market has surged to $250 billion, with the vast majority of tokens pegged to the US dollar. This has raised concerns within the ECB that the widespread adoption of these digital assets across the eurozone could lead to monetary “dollarization”, weakening Europe's control over its own monetary policy.
Jürgen Schaaf, advisor to the ECB’s market infrastructure and payments division, stated that unchecked adoption of dollar-denominated stablecoins could transform parts of the eurozone into “dollarized economies,” limiting policymakers’ ability to manage interest rates and liquidity effectively.
Schaaf also warned that growing political and regulatory support for stablecoins in the United States could tilt global financial influence further in Washington’s favor — potentially lowering borrowing costs in the US while raising financing costs in the euro area.
He emphasized that large-scale failures of major stablecoins could spread shockwaves across the financial system, while the anonymity of many coins makes them attractive for illicit use.
In addition, if private stablecoin issuers begin offering interest-bearing accounts, commercial banks may face deposit outflows, which would reduce their lending capacity and disrupt their traditional role in the economy.
ECB response: The digital Euro
Schaaf argued that Europe cannot allow foreign private companies to reshape its financial infrastructure. He emphasized that the ECB must act preemptively to safeguard price stability and retain control over monetary policy within the eurozone.
As a countermeasure, the ECB is accelerating its plans to launch its own central bank digital currency (CBDC) — the digital euro.
Unlike stablecoins, the digital euro would be issued directly by the ECB, backed by public trust, and designed to combine the efficiency of digital payments with the security and reliability of central bank money.
As we wrote, ECB explores conditional payments for digital euro without blockchain
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