Stablecoins Without Borders: Stablecoin Multi-Country Issuance and Dollar-Run Risks in Europe

In this Policy Insight paper, authors Edoardo D. Martino, Eric Monnet & Enrico Perotti (CEPR) look into the risks posed by multi-country issuance (MCI) of US dollar-denominated stablecoins, where the same digital token is issued across multiple jurisdictions. With stablecoin capitalization exceeding $300 billion in 2025 and playing a growing role in crypto trading and decentralized finance, the authors focus on the run risk created by holders’ ability to redeem tokens at par.

The paper identifies redemption arbitrage across regulatory borders as a key vulnerability. A comparison of US and EU rules finds that the EU framework provides stronger redemption protections, potentially encouraging holders to redeem through EU-issued tokens during periods of stress. Because MCI tokens are technologically fungible, this could shift redemption pressure and run risk from US issuers onto their EU counterparts.

Rather than assessing whether MCI should be prohibited or technologically separated, the authors examine how the EU could contain these risks if MCI remains permitted. They propose contingent redemption measures, including charges or temporary redemption gates triggered when withdrawals exceed a predefined threshold. These automatic stabilizers would seek to create functional equivalence with US redemption rules and reduce incentives for investors to shift redemption pressure toward Europe during market stress.

The authors also propose a “systemic exception” mandate for the ECB, allowing it to intervene in extreme circumstances by suspending withdrawals of non-euro stablecoins. The broader analysis examines stablecoin design and run mechanics, compares the EU’s MiCAR regime with the US GENIUS Act, and evaluates regulatory options for reducing dollar-stablecoin risks while protecting European monetary sovereignty…

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