ECB’s Christine Lagarde Rejects Stablecoins as Path to Strengthen Euro’s Global Role

EU Central Bank Pushes Tokenized Settlement Over Private Stablecoins

European Central Bank President Christine Lagarde said stablecoins should not be seen as the main tool to strengthen the euro’s international standing, arguing instead for a system built around central bank-backed digital settlement infrastructure.

Speaking at the Banco de España LatAm Economic Forum in Spain, Lagarde noted that stablecoins combine both monetary and technological roles, but said these functions are often confused in policy debates. She emphasized that Europe should focus on developing regulated tokenized financial systems rather than relying on private digital currencies.

Dollar Stablecoins Dominate Global Market Amid Policy Debate

Dollar-backed stablecoins currently account for about 98% of the global market, reinforcing US influence in digital finance. While Lagarde acknowledged that euro-denominated stablecoins under the EU’s MiCA framework could increase demand for euro assets, she warned they also introduce financial stability risks such as reserve fragility and potential bank deposit outflows.

She referenced past market stress events, including the 2023 Silicon Valley Bank collapse and the temporary depegging of USDC, as examples of how quickly confidence in stablecoins can shift under pressure.

EU Strategy Focuses on Tokenized Infrastructure and Central Bank Money

Rather than expanding private stablecoins, Lagarde highlighted Europe’s push toward tokenized settlement systems backed by central bank money. Initiatives such as the Eurosystem’s Pontes project and the Appia roadmap aim to create interoperable digital finance infrastructure across the region by 2028.

She said the goal is to support innovation in tokenized money systems while avoiding reliance on private stablecoin models, reinforcing Europe’s preference for regulated, central bank-led digital financial infrastructure.