EU ministers back ECB against easing euro stablecoin rules

At an informal meeting of EU finance ministers in Nicosia last Thursday, ministers rejected proposals to loosen liquidity rules for euro stablecoins and to give stablecoin issuers access to European Central Bank funding. The ministers’ position matched the ECB’s view that looser rules and central bank backstops would threaten bank funding and the transmission of monetary policy.

The proposals followed a policy paper from the Brussels think tank Bruegel. The paper argued that strict liquidity requirements under the Markets in Crypto-Assets framework make euro stablecoins uncompetitive and proposed easing those rules and allowing issuers to use ECB-style backstop financing to help euro-denominated tokens scale.

ECB President Christine Lagarde warned that increased issuance of euro stablecoins with fewer safeguards could “trigger deposit outflows from banks, reduce lending capacity across the eurozone, and make the ECB’s interest-rate decisions harder to transmit through the real economy.” Officials at the meeting cited ECB modeling from November 2025 that showed a $2 trillion stablecoin market could let dollar-backed tokens act as a channel for U.S. financial stress into European banks. An ECB adviser described the current euro stablecoin market as “dismal.”

The ECB’s concerns focus on two risks. A shift of household savings into stablecoins could reduce banks’ deposit bases and their capacity to lend. Widespread stablecoin use could also weaken monetary policy transmission because rate changes pass through banks and stablecoins can operate outside that chain.

The ECB is promoting tokenized infrastructure tied to central bank money, including the Pontes wholesale settlement project, and has set a target to deliver a digital euro by 2029.

Market data presented at the meeting showed Europeans account for about 38% of global stablecoin transaction activity while euro-denominated tokens make up roughly 0.3% of global stablecoin supply. About 98% of stablecoin supply is denominated in U.S. dollars. The GENIUS Act, enacted in July 2025, requires payment stablecoins in the United States to be backed 1:1 with high-quality dollar assets.

Private groups are developing euro-based alternatives. The Qivalis consortium, a Netherlands-based joint venture backed by 37 banks across 15 countries including BNP Paribas, ING, UniCredit and Intesa Sanpaolo, is seeking MiCA authorization to launch a euro stablecoin in the second half of this year. Qivalis CEO Jan-Oliver Sell called the project an “institutional-grade ‘Made in Europe’ solution” designed to keep payment infrastructure within European control.

There is not full agreement within European institutions. Bundesbank President Joachim Nagel publicly endorsed euro stablecoins in February, diverging from the ECB’s position. Supporters view private digital money as a payments innovation that can be managed. Opponents warn that giving stablecoin issuers access to central bank backstops would require deep changes to financial safety nets.

At the Nicosia meeting, ministers sided with the ECB’s cautious approach. Private capital and industry consortia continue to build euro-denominated infrastructure that could reach market scale before a digital euro is available.