ECB officials oppose easing rules for euro stablecoins in EU talks

European Central Bank officials have strongly opposed proposals to ease regulations for euro-denominated stablecoins, warning that wider adoption could destabilize traditional banks and weaken monetary policy. The pushback occurred during a meeting of EU finance ministers in Nicosia, Cyprus, where policymakers debated a policy paper from the Brussels-based think tank Bruegel.

The Bruegel proposal called for lighter liquidity rules and potential access to European Central Bank funding facilities for private stablecoin issuers. The aim was to help euro-pegged tokens compete more effectively with dominant dollar-backed rivals like USDT and USDC in the growing digital payments market. Currently, euro-denominated stablecoins represent only a tiny fraction of the global supply.

Central bank officials, led by ECB President Christine Lagarde, argued against the plan. They warned that conferring central bank-style support, such as lender-of-last-resort access, to private firms without equivalent supervision would create asymmetric risk in the financial system. The primary concern is that a large-scale shift of deposits from banks to stablecoins could reduce bank lending capacity across...