Overview
- European Central Bank officials pushed back on a Bruegel proposal at a finance ministers' meeting, rejecting suggestions to relax liquidity rules and to grant stablecoin issuers access to ECB funding.
- Bruegel's paper, authored by Lucrezia Reichlin, Bo Sangers and Jeromin Zettelmeyer, argued looser rules would help Europe build a euro stablecoin market that now lags dollar tokens and risks 'digital dollarisation'.
- Central bankers, including ECB President Christine Lagarde, said on May 22 that large-scale euro stablecoins could pull deposits out of banks, raise banks' funding costs and weaken the ECB's ability to set interest rates.
- A European bank consortium called Qivalis has grown to 37 institutions and says it aims to launch a euro-denominated stablecoin later in 2026, though that timing remains an industry plan rather than a confirmed product release.
- The debate plays out against MiCAR rules that force issuers to hold reserves in bank deposits and liquid assets, US legislation that sets lighter rules, and the ECB's parallel push for tokenised central-bank settlement and a digital euro by 2029.