A new warning from Dutch central bank governor Olaf Sleijpen has reignited debate among policymakers in Europe. Concerns are rapidly increasing as dollar-backed stablecoins have become a financial channel that extends deep into the Eurozone economy.
This development has led to a new type of pressure on the European Central Bank, in a dynamic similar to the effects of the old Eurodollar, which previously constrained global central banks.
For his part, Sleijpen explained this risk in a detailed interview, pointing out that stablecoins linked to U.S. assets can affect financial conditions in Europe. He added that the issue is no longer limited to cryptocurrency markets, but has begun to touch on monetary sovereignty, emphasizing a structural shift that many officials have been reluctant to discuss publicly.
The increasing correlation between U.S. liquidity and the European economy
Sleijpen clarified that stablecoins have expanded rapidly this year, with trading volumes increasing by 48%, reaching over 300 billion dollars.
This increase came after new rules were issued in the United States, allowing private issuers to expand their operations while holding many of these currencies in U.S. Treasury bonds as collateral. This creates a close link between U.S. interest rate cycles and European financial activity.
He also warned that any disruption in these assets could put the European Central Bank in a difficult position. A sudden rush to withdraw could force issuers to sell U.S. bonds, which could transfer pressures to markets affecting Europe and also impact inflation, credit, and liquidity.
On the other hand, the Dutch central bank governor added that the bank may need to adjust interest rates in response, without specifying the direction of the change, emphasizing that financial stability tools should be the first line of defense.
He noted that his concern reflects a broader shift within the institution, compared to some emerging economies where the intensive use of the dollar weakens the authorities' ability to control interest rates.
new KGST
It is worth noting here that the new concern differs from previous discussions, as stablecoins have turned into cross-border liquidity drivers, and their link to U.S. assets gives them an influence that extends beyond cryptocurrency markets, which may alter European conditions before policymakers respond.
According to Sleijpen, this development requires closer monitoring and poses a challenge for the European Central Bank to maintain its independence amid rapid monetary changes.