European Central Bank Executive: Digital Euro Key Tool to Counter Stablecoin Risks

June 1 – Isabel Schnabel, a member of the European Central Bank’s (ECB) Executive Board, told The Block that the rapid growth of stablecoins could pose risks to financial stability, monetary policy transmission, and the global monetary system. She noted central banks worldwide should address these risks by strengthening regulation and advancing central bank digital currency (CBDC) projects. Schnabel emphasized a digital euro is critical to preserving central bank money’s anchoring role. Global stablecoin market capitalization has reached nearly $300 billion, with Tether’s USDT and USD Coin (USDC) accounting for roughly 90% of the market. Dollar-denominated stablecoins are reinforcing the U.S. dollar’s dominance in the global financial system via network effects, which could amplify how U.S. monetary policy spreads globally—while euro stablecoins remain on the periphery of this space. Schnabel added Europe should not resist financial innovation, but instead ensure it develops within a framework that safeguards financial stability, monetary control, and public trust. She argued a digital euro would not only guarantee the public continued access to central bank money, but also cut Europe’s reliance on non-European payment providers, boost the EU’s financial autonomy, and provide a unified payment solution with legal tender status.