Catenaa, Monday, June 1, 2026- European Central Bank board member Isabel Schnabel warned that the rapid growth of stablecoins could threaten global financial stability and deepen dependence on the US dollar, arguing that Europe must accelerate development of a digital euro to protect monetary sovereignty.
Speaking at the 2026 Bank of Korea International Conference in Seoul, Schnabel said stablecoins remain vulnerable to liquidity shocks and investor panic because of reserve mismatches and potential losses of confidence in backing assets.
She warned that dollar-backed stablecoins could strengthen the global influence of US monetary policy through expanding network effects, while euro-backed stablecoins remain a very small segment of the market.
The global stablecoin market has expanded to nearly $300 billion, according to ECB estimates, with Tether’s USDT and Circle’s USDC controlling about 90% of total circulation.
Stablecoins have increasingly become important infrastructure for crypto trading, cross-border payments and decentralized finance applications.
However, regulators globally continue debating whether privately issued digital dollars could undermine central bank authority, weaken monetary policy transmission and increase systemic risks during financial stress.
Schnabel argued that Europe should not resist financial innovation but instead develop safeguards capable of preserving trust, monetary control and stability.
The ECB official said the digital euro could strengthen Europe’s strategic autonomy by reducing dependence on foreign payment systems and offering citizens direct access to public digital money.
The project could also create a unified pan-European payment network with legal tender status while reducing fragmentation across the region’s financial infrastructure.
The ECB currently expects to complete technical preparations for a possible digital euro launch by 2029 if legislation is approved in 2026.
Meanwhile, the debate highlights growing divergence between Europe and the United States over central bank digital currencies.
The Trump administration has strongly opposed a US CBDC while supporting private-sector crypto innovation and stablecoin expansion.
Coinbase Director of International Policy Katie Harries said the European Union’s MiCA crypto framework provides a strong regulatory base but requires reforms to remain globally competitive.
Harries urged European regulators to make euro stablecoins more commercially viable, clarify rules surrounding decentralized finance and encourage tokenization growth.
She also criticized MiCA reserve rules requiring stablecoin issuers to hold between 30% and 60% of reserves in commercial bank deposits, arguing the policy may concentrate financial risks rather than diversify them.
The European Union introduced the Markets in Crypto-Assets framework to establish comprehensive crypto regulation across member states.
Coinbase secured a MiCA license in Luxembourg during 2025, allowing the exchange to expand regulated operations across the EU.
The European Commission has opened a public consultation process reviewing MiCA rules through August 31, 2026.
The ECB warns stablecoins could deepen US dollar dominance and financial risks as Europe accelerates plans for a digital euro and stronger crypto regulation.
