ECB Blocks Push To Ease Euro Stablecoin Reserve Rules

The European Central Bank (ECB) rejected proposals to ease euro stablecoin reserve rules and provide issuer backstop access, according to Reuters. The proposal came from a policy brief by Bruegel, a Brussels-based think tank, which argued that more permissive reserve rules and a central bank backstop are needed to grow a euro stablecoin market that remains marginal in a sector dominated by dollar-denominated tokens.

The largest euro stablecoin issuer is Circle's EURC, with the global stablecoin market valued at $300 billion. Euro-pegged tokens currently account for just 0.3% of this total.

ECB President Christine Lagarde and several central bankers pushed back in the room, arguing that allowing stablecoin issuers to pull deposits from European banks at scale would raise lenders' funding costs and reduce their capacity to extend credit.