ECB board member Isabel Schnabel backed the digital euro to counter risks from dollar-dominated stablecoins.
Stablecoin News
European Central Bank board member Isabel Schnabel has called for robust regulation and the development of the digital euro to address financial stability risks from stablecoins. Schnabel made the remarks on Monday during a speech at the 2026 Bank of Korea International Conference in Seoul.
Schnabel said the global stablecoin market cap has grown to nearly Ethereum300 billion, though she noted growth has recently moderated. TEthereumer's EthereumUSDT and Circle's EthereumUSDC togEthereumer account for roughly 90% of the total market capitalization, and virtually all stablecoins in circulation are denominated in US dollars.
The ECB official warned that dollar-denominated stablecoins risk reinforcing US dollar dominance through network effects, amplifying the international transmission of US monetary policy. She noted that euro-pegged stablecoins remain marginal, creating an asymmetry in how monetary influence flows across borders.
Schnabel identified stablecoin vulnerabilities such as liquidity mismatches and the potential for runs driven by loss of trust in the quality of backing assets. She argued these risks extend to monetary policy transmission and the broader international monetary order, not only to individual users or institutions.
Despite those risks, Schnabel said the appropriate response is not to restrict innovation but to develop a framework that preserves stability, monetary control, and trust in the currency. For Europe, she identified the digital euro as the essential tool for preserving citizens' access to public money and reducing dependence on non-European payment providers.
The digital euro could provide a pan-European payment solution with legal tender status while reducing fragmentation across European payment systems, Schnabel said. The ECB aims to be ready for an initial issuance by 2029, contingent on the digital euro regulation being adopted in 2026, and the project is currently in its technical preparation phase.
Separately, Coinbase's director of international policy, Katie Harries, published a blog post Monday calling on the European Commission to use its upcoming Markets in Crypto-Assets Regulation (MiCA) review to strengthen Europe's crypto competitiveness. Her recommendations include making euro stablecoins more viable, clarifying DeFi access for regulated entities, and allowing non-interest incentives such as cashback and loyalty rewards for stablecoin users.
Harries also criticized the requirement that 30% to 60% of stablecoin reserves be held in commercial bank deposits, arguing it concentrates rather than diversifies risk. The European Commission has opened a public consultation on MiCA through August 31, 2026.
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