The European Commission wants to move forward with the announcement of new rules for the stablecoin market, despite warnings from the European Central Bank (ECB), which claims the proposed standards could destabilize European banks during periods of high volatility. The new guidelines would require that virtual currencies issued outside the EU be treated as interchangeable with those authorized within the continental market.
ECB’s Concerns
European Union has recently approved the MiCA (Market in Crypto-Assets) regulation, which will fully come into force in July 2026. Unlike the U.S. Genius Act, MiCA regulates the entire cryptocurrency sector with stricter rules and fewer public guarantees.
However, on the other side of the European regulatory debate stands the ECB—particularly its president, Christine Lagarde—who has repeatedly voiced concerns about private stablecoins, emphasizing risks to financial stability and the effectiveness of monetary policy. According to Lagarde, these assets could attract traditional bank deposits without always ensuring a stable value. Lagarde has also reiterated that the digital euro is essential for Europe’s financial autonomy, especially in light of the Genius Act, introduced under Trump administration to promote cryptocurrencies.
Meet the stablecoins, a “steady” alternative to traditional cryptocurrencies
The Digital Euro Risks Falling Behind Stablecoins
The digital euro, which the Eurosystem has been working on for five years, is designed as an additional payment option—low-cost, functional both online and offline, with basic features offered for free and open to value-added services. This project is progressing on two parallel tracks: on one hand, its features, distribution methods, and the involvement of private intermediaries have been defined; on the other, the legislative process is underway, with a draft regulation proposed by the European Commission currently under discussion in the European Parliament and Council.
The regulation is the subject of intense debate, with some countries—such as Germany—taking a more cautious stance. Estimates on issuance timelines vary: in an optimistic scenario, if the regulation were finalized by the end of the year, the digital euro could launch in 2028.
Meanwhile, the ECB is pushing for the crypto-euro. “The sooner we introduce the digital euro, the sooner merchants will start adapting to its standards and avoid seeking alternative payment forms or aligning with stablecoin standards,” said Piero Cipollone, a member of the ECB’s Executive Board, in his testimony to the European Parliament’s Committee on Economic and Monetary Affairs. “The risk of falling behind stablecoins,” he added, “depends on how long it takes to develop the digital euro and implement the necessary legislation.”
Concerns from the Bank for International Settlements
Cipollone’s view is echoed by other ECB members, who highlight the risks associated with stablecoins. According to Philip Lane, a member of the ECB’s Executive Board and former Governor of the Central Bank of Ireland, “stablecoins lack key attributes of central bank money“. Among other limitations—as pointed out by the Bank for International Settlements (BIS)—is their inelastic supply, in contrast to currencies issued by a central authority, which results from issuance driven by initial customer purchases.
In contrast, central bank money can be issued elastically (especially in times of crisis) through lending to counterparties or open market operations. Furthermore, “one‑to‑one parity between the value of a stablecoin and the value of a currency cannot be guaranteed under all circumstances, such that stablecoins do not protect the singleness of money.”
