ECB chief Christine Lagarde raises fresh concerns over euro stablecoins

European Central Bank President Christine Lagarde has intensified her opposition to euro-denominated stablecoins, warning that the risks to financial stability and monetary control outweigh any benefit to the euro’s international role.

Speaking Friday at the Banco de Espana LatAm Economic Forum in Spain, Lagarde argued that Europe does not need to replicate the stablecoin models that have emerged around the U.S. dollar. She said the technological benefits tied to blockchain-based payments can instead be delivered through public infrastructure supported by central bank money.

“The case for promoting euro-denominated stablecoins is far weaker than it appears,” Lagarde said during the event.

Her remarks targeted growing calls within Europe to develop a local stablecoin ecosystem under the EU’s Markets in Crypto-Assets Regulation framework. Bundesbank President Joachim Nagel publicly supported that idea earlier this year, while several European banks and payment firms have already started preparing regulated products.

Lagarde separated what she described as the monetary role of stablecoins from their technological use. According to the ECB president, reserve-currency expansion tied to privately issued tokens creates vulnerabilities that Europe’s financial system cannot easily absorb.

She pointed to risks tied to bank runs, de-pegging events, and deposit migration away from commercial banks, citing the instability that followed the 2023 Silicon Valley Bank collapse and Circle’s USDC disruption. In a bank-dependent economy such as the euro area, Lagarde argued that large-scale movement of deposits into stablecoins could weaken lending capacity and complicate monetary-policy transmission.

An ECB working paper published in March also warned that widespread stablecoin adoption could undermine euro-area monetary sovereignty and expose banks to funding pressure, particularly when stablecoins are linked to foreign currencies.

ECB backs tokenized settlement systems instead

Rather than supporting privately issued euro stablecoins, Lagarde promoted the ECB’s own wholesale tokenization initiatives, including the Pontes and Appia settlement projects. She also linked Europe’s digital finance plans to deeper capital market integration through the EU’s savings and investments union.

Friday’s speech extended a position Lagarde has maintained for several years as the ECB continued pushing the digital euro project alongside tighter stablecoin oversight.

At a European Systemic Risk Board conference in Frankfurt in September 2025, Lagarde called for stricter supervision of non-EU stablecoin issuers and warned that uneven regulations could expose European reserves to redemption pressure during market stress.

At the time, she argued that stablecoin operators should not be allowed to serve EU users unless they comply with safeguards comparable to those imposed under MiCAR. Lagarde also warned that liquidity risks could emerge if reserves are spread across multiple jurisdictions while investors rush to redeem tokens in regions with stronger protections.

“In the event of a run, investors would naturally prefer to redeem in the jurisdiction with the strongest safeguards,” she said during the 2025 conference.

Her latest comments arrive as private-sector activity around euro stablecoins accelerates despite the ECB’s concerns. A consortium of 12 European lenders operating through Netherlands-based joint venture Qivalis is preparing to launch a MiCA-regulated euro stablecoin during the second half of 2026.

Market data from CoinGecko shows dollar-backed stablecoins still dominate the sector by a large margin, while non-dollar stablecoins account for only a small portion of total circulating supply.