European Central Financial institution (ECB) President Christine Lagarde urged European Union (EU) lawmakers to impose stringent necessities and safeguards on international stablecoins.
Lagarde argued they need to adjust to the bloc’s regulatory requirements earlier than working on EU soil, she stated in a speech at a European Systemic Threat Board (ESRB) convention in Frankfurt on Wednesday.
The ECB president cautioned that in a stablecoin run, buyers could be extra seemingly redeem in jurisdictions with stronger protections, such because the EU, the place Markets in Crypto-Belongings (MiCA) regulation prohibits redemption charges, probably depleting native reserves.
“The chance of liquidity mismanagement throughout jurisdictions is one we have now seen earlier than. Banking teams, for instance, are already required to make sure that reserves can be found within the a part of the group the place and when they’re wanted,” Lagarde stated.
“Because of this necessities comparable to the web secure funding ratio and liquidity protection ratio apply at each stage of consolidation. Multi-issuance schemes replicate these exact same dangers inside a single entity.”
She emphasised the necessity for sturdy regulation to stop arbitrage and to make sure monetary stability throughout borders.
Stablecoins – token pegged to the worth of a conventional monetary asset comparable to a fiat forex – have been entrance and heart of developments within the method to digital property by governments and regulators in 2025.
Main jurisdictions such because the U.S. and Hong Kong have launched guidelines for the issuance and therapy of stablecoins, following on from the EU, which handles them by means of MiCA.
