ECB Pushes Digital Euro as Stablecoin Risks Rise in Global Financial System

European Central Bank board member Isabel Schnabel has warned that the rapid rise of stablecoins could threaten financial stability and strengthen U.S. dollar dominance in global payments. Speaking at a Bank of Korea conference in Seoul, she said stablecoins now represent a growing part of the financial system and require stronger regulation alongside central bank digital currencies.

Schnabel noted that the global stablecoin market has expanded to nearly $300 billion, with dollar-backed tokens such as USDT and USDC making up about 90% of supply. She said this dominance could reinforce the international role of the U.S. dollar through network effects, increasing its influence on global monetary conditions.

She also warned that stablecoins carry liquidity mismatch risks and could face sudden runs if trust weakens, potentially creating broader financial instability.

ECB supports digital euro for financial stability and payment control

To address these risks, Schnabel said central banks should not block innovation but guide it through regulation and public digital money. She emphasized the digital euro as a key tool to preserve access to central bank money, strengthen European payment independence, and reduce reliance on foreign providers.

The digital euro is currently in preparation, with possible issuance targeted around 2029 if regulatory approval is completed. Meanwhile, Coinbase policy representatives also urged the EU to improve stablecoin rules under the MiCA framework to support competitiveness and innovation.