ECB Rejects Proposal to Ease Euro Stablecoin Rules Amid Financial Stability Concerns

The European Central Bank (ECB) has rejected a proposal to ease liquidity requirements for euro stablecoin issuers, which would have allowed them to access ECB funding. The proposal, made by Bruegel, a Brussels-based think tank, aimed to grow the euro stablecoin market, currently marginal at just 0.3% of the global stablecoin market.

The ECB's decision was reported by Reuters, citing sources familiar with the discussions. Central bankers pushed back against the proposal, arguing that allowing stablecoin issuers to pull deposits from European banks would raise lenders' funding costs and reduce their capacity to extend credit.

ECB President Christine Lagarde had previously expressed her opposition to euro stablecoins, stating that any benefits they might bring are outweighed by risks to financial stability and monetary policy transmission. She pointed to tokenized commercial bank deposits and the ECB's Pontes and Appia wholesale settlement projects as more suitable infrastructure for on-chain euro transactions.

The rejection of the proposal comes as the European Commission reviews the Markets in Crypto-Assets (MiCA) regulation, which requires stablecoin issuers to hold a large share of reserves in bank deposits and other liquid assets. The US framework imposes lighter requirements, which some supporters see as reinforcing dollar dominance through regulated tokens.