Isabel Schnabel, who sits on the bank’s executive board, said at a Bank of Korea conference in Seoul that these tokens threaten financial stability and monetary policy by increasing the risk of runs and strengthening the dominance of the U.S. dollar, according to the report.
It’s why “central banks and regulators need to be ready to adapt regulation, monetary policy implementation and payment infrastructure in an agile manner to safeguard financial stability, preserve monetary control and anchor their currency’s role in the digital age,” Schnabel said, per the report.
The ECB’s strategy is based on the digital euro as a retail central bank digital currency (CBDC) and tokenized central bank money as a wholesale CBDC, the report said.
Stablecoins have surged in popularity in the last year, although some regulators have warned about their threat to financial stability, leading to calls for a European version of the coins, according to the report.
For example, Bundesbank President Joachim Nagel in February promoted the idea of euro-denominated stablecoins, while ECB President Christine Lagarde took a critical position in a speech last month.
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Schnabel referenced that speech in her remarks Monday, per the report, saying that “many of the advantages of stablecoins arise from the technology on which they are based rather than from the characteristics of the instrument itself.”
She also expressed some hesitancy about the success of stablecoins, saying it “remains to be seen” whether they’ll find their place, or whether tokenized deposits will prove themselves as a better alternative, according to the report.
Her comments came one day after Federal Reserve Governor Christopher Waller said the spread of stablecoins around the world could expand the spread of U.S. central bank policy. He also questioned the need for CBDCs, calling them a “stupid thing.”
While stablecoins are becoming more mainstream, the PYMNTS Intelligence report “Waiting for Certainty: Why Most CFOs Are Holding Back on Crypto and Stablecoins” found that many chief financial officers are reluctant to adopt them because of regulatory uncertainty.
That uncertainty was mentioned by 67% of CFOs as an obstacle to using stablecoins for business payments or treasury functions, while 77% said the same of cryptocurrencies.
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