🔍 ECB Warning About Stablecoins: Risks to Monetary Sovereignty from Outside
📌 Main Content:
ECB is concerned that stablecoins – especially those pegged to the USD like USDT and USDC – could undermine the financial sovereignty of the Euro area.
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💥 Potential Negative Impacts:
1. Loss of control over monetary policy:
If individuals and businesses use USD stablecoins instead of EUR, the ECB will lose its effectiveness in regulating interest rates and controlling inflation.
2. Increased borrowing costs in Europe:
Capital may flow strongly to the US, causing bond yields and credit costs in the Eurozone to rise.
3. Dependence on USD & the US:
An increasing proportion of users of USD-pegged stablecoins means that Europe will become more dependent on the US financial system.
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🔎 Reasons for ECB's Concerns at This Time:
• Rapid growth of USD stablecoins:
By mid-2025, over 90% of stablecoins in the market are pegged to the USD, while EUR-based stablecoins have not developed robustly.
• Cross-border payments increasingly rely on blockchain, where USD stablecoins are the most commonly used medium.
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✅ Preventive Actions by the ECB:
• Promote the development of a digital Euro to compete.
• Call for stricter regulations on stablecoins from outside the region.
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📌 Conclusion:
Stablecoins can provide convenience in payments, but without control, they can become the “Trojan horse” of finance threatening the monetary policies of countries, especially those that do not issue strong domestic stablecoins like the Eurozone.
#stable #BinanceSquare ⸻