European Central Bank Executive Board member Schnabel: Stablecoins pose multiple risks to financial stability and monetary policy.

Isabel Schnabel, a member of the Executive Board of the European Central Bank, stated that stablecoins pose multiple risks to financial stability and monetary policy, and the best way for the European Central Bank to respond is to ensure that public money continues to act as the core anchor of the financial system. Schnabel said on Monday that while innovations like stablecoins can bring "significant benefits," these tools may also exacerbate the risk of runs on financial markets during times of stress, weaken the transmission of interest rate decisions, and further entrench the dominance of the US dollar in the international monetary system. She stated, "Therefore, central banks and regulatory authorities need to be prepared to adjust regulatory frameworks, monetary policy implementation mechanisms, and payment infrastructures in a more flexible manner to maintain financial stability, preserve monetary control, and ensure that the domestic currency continues to play a core role in the digital age." Schnabel mentioned that the European Central Bank's strategy is based on two pillars - the Digital Euro, as a central bank digital currency (CBDC) for retail users; and Tokenized Central Bank Money, as a CBDC for institutions and wholesale markets. With US President Trump pushing for further mainstreaming of cryptocurrencies, most stablecoins pegged to the dollar have rapidly expanded in the past year. However, global regulatory agencies and financial regulators have also warned that stablecoins may pose potential threats to financial stability. The stablecoin trend has also sparked concerns in Europe. These tools could gain a foothold in the European market, threatening the European banking system and monetary sovereignty, and sparking discussion about whether Europe needs to introduce its own version of stablecoin. Bundesbank President Joachim Nagel publicly supported stablecoins denominated in euros in February, while European Central Bank President Lagarde took a very critical stance in her speech last month. Schnabel emphasized Lagarde's speech on Monday, stating, "Many of the advantages of stablecoins actually stem from the technology they rely on, rather than the characteristics of the financial instrument itself." At the same time, she expressed reservations about the future prospects of stablecoins. She said, "In such an environment, it remains to be seen whether stablecoins can find their place in the financial system like money market funds did 50 years ago, or whether other innovative forms such as Tokenized Deposits will prove to be more promising alternatives." Just the day before Schnabel made the above remarks, Federal Reserve Board member Waller stated that the global expansion of stablecoins could expand the influence of US monetary policy. Waller also questioned the necessity of promoting central bank digital currencies (CBDCs) and called digital central bank currency "a dumb idea." This highlights the clear divergence between European and American central banks in the development path of digital currencies. Some officials at the Federal Reserve believe that stablecoins can strengthen the global status of the dollar, while the European Central Bank is more concerned about stablecoins undermining monetary sovereignty and policy transmission capabilities, and therefore hopes to respond through the digital euro.