ECB President Christine Lagarde said euro-denominated stablecoins carry risks to financial stability and monetary policy transmission that outweigh their potential benefits. Speaking at the Banco de España LatAm Economic Forum in Spain, she argued the case for euro stablecoins is weaker than many supporters suggest, even as interest in euro-pegged crypto assets grows across the region.
Her concern centers on what happens under stress. Stablecoins can face runs during market turmoil, and if households and companies move retail deposits out of banks and into stablecoins, banks lose a stable source of funding. They may then rely more heavily on costlier wholesale funding and cut back lending. That, in turn, narrows the channel through which ECB rate decisions reach businesses and consumers.
USDC depeg cited as a real-world stress example
Lagarde pointed to USD Coin’s sharp devaluation during the Silicon Valley Bank collapse as a live example of stablecoin fragility. Her remarks come as several major euro area banks, including Societe Generale, have been developing crypto assets linked to the single currency in a market still dominated by dollar-pegged tokens.
Under EU rules, stablecoin issuers must keep at least 30% of reserve assets in bank deposits, with the remainder held in low-risk liquid instruments such as sovereign bonds. Even with that framework in place, Lagarde said tokenized commercial bank deposits are a safer blockchain-native option because they preserve prudential safeguards inside the regulated banking system while still enabling programmable onchain settlement.
Europe is split over the preferred model
That position cuts against advocates of private euro stablecoins, including the European Commission and France, which have backed euro-pegged instruments as a way to strengthen the currency’s global role. Bundesbank board member Michael Theurer took a softer line, calling both tokenized deposits and stablecoins “crucial” while also acknowledging the risks raised by Lagarde.
The comments arrive during an active phase for digital money initiatives in Europe. On the public side, the ECB is moving ahead with digital euro infrastructure and is targeting payment service provider selection in 2026, ahead of a structured 12-month pilot expected to start in the second half of 2027. On the private side, Qivalis, a consortium of 12 European banks including BNP Paribas, ING, UniCredit, CaixaBank, and BBVA, is aiming to launch a MiCA-compliant euro stablecoin in H2 2026. The token is designed to be backed one-to-one, with at least 40% of reserves held in bank deposits, a structure meant to address ECB concerns about deposit migration. Societe Generale is also advancing a cross-border payments and onchain settlement strategy, while Oddo BHF already operates a live MiCA-compliant euro stablecoin.