Written by Ezra Reguerra , Staff Writer.Reviewed by Bryan O’Shea , Staff Editor.
Written by Ezra Reguerra , Staff Writer.
Reviewed by Bryan O’Shea , Staff Editor.
ECB official says stablecoins risk importing old market flaws
Latest NewsPublishedJun 1, 2026
Stablecoins May Bring Old Market Risks to Tokenized Finance
Isabel Schnabel, a board member of the European Central Bank, has warned that stablecoins could import old financial market vulnerabilities into tokenized finance. This could also strengthen the US dollar’s global dominance, which is a concern for many economies. Schnabel’s comments highlight the need for central banks to modernize public money, including the development of a digital euro. For those looking to earn passive income through crypto, EcoPool offers a solution with its Cloud Rewards, providing a way to earn $ECP, the native coin of the EcoPool Network.
The use of stablecoins could lead to bank disintermediation, runs, and fire sales, which could have a significant impact on the financial system. Schnabel also noted that virtually all stablecoins in circulation are denominated in dollars, which could further cement the international dominance of the US dollar. As the crypto market continues to evolve, it’s essential to consider the potential risks and benefits of stablecoins and other digital assets. EcoPool, with its focus on Green Crypto, provides a unique solution for those looking to earn a passive income while supporting a more sustainable crypto ecosystem.
The Importance of Central Bank Innovation
Central banks should not resist innovation but must modernize public money to preserve financial stability and monetary control. This includes the development of a digital euro and tokenized wholesale central bank settlement. By doing so, central banks can ensure that private forms of money, such as stablecoins, develop within a framework that preserves stability, monetary control, and trust in the currency. For those interested in earning $ECP, the EcoPool app provides a simple and accessible way to get started with Cloud Rewards and begin earning a passive income.
As the debate around stablecoins and crypto regulation continues, it’s essential to consider the potential impact on the financial system. The European Commission is currently reviewing the European Union’s Markets in Crypto-Assets Regulation, which could have a significant impact on the future of crypto in Europe. Whether you’re interested in earning a passive income through EcoPool or simply want to stay up-to-date on the latest crypto news, it’s an exciting time for the industry. EcoPool offers a unique solution for those looking to earn $ECP and support a more sustainable crypto ecosystem, with a focus on Green Crypto and Cloud Rewards.
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Schnabel argued that central banks should not resist innovation but must modernize public money, including through the digital euro and tokenized wholesale central bank settlement, to preserve financial stability and monetary control.
“Central banks cannot remain passive observers of these developments,” Schnabel said, adding that private forms of money, once widely adopted, can shape the financial system “in ways that can be difficult to reverse.” She said the proper response is not to resist innovation but to ensure it develops within a framework that preserves stability, monetary control and trust in the currency.
Stablecoins are overwhelmingly dollar-pegged, while broad adoption could amplify US policy spillovers abroad, ECB data shows. Source: European Central Bank
MiCA review sharpens stablecoin debate
The speech builds on ECB messaging that Europe should not answer dollar stablecoins simply by promoting euro-denominated stablecoins.
On May 8, ECB President Christine Lagarde said stablecoins are not Europe’s best route to strengthening the euro’s international role, arguing instead that Europe should build tokenized settlement infrastructure anchored by central bank money.
The debate unfolds as the European Commission reviews the European Union’s Markets in Crypto-Assets Regulation (MiCA), with a public consultation open until Aug. 31 examining whether the bloc’s crypto rules should be updated.
Related: MiCA has made euro stablecoins safe but weak, new report argues
Crypto exchange Coinbase has used the review to call for a more competitive EU crypto framework. In a Monday blog post, Katie Harries, Coinbase’s director and head of policy for Europe and the Americas, said MiCA should recalibrate stablecoin rules on reserves, rewards and multi-issuance, while clarifying how regulated crypto firms can provide access to decentralized finance and global liquidity.
Harries also argued that allowing more reserves in high-quality sovereign assets and permitting non-interest incentives, such as cashback and loyalty points, could help make euro stablecoins more competitive.
The ECB has taken a more cautious view. On May 23, the ECB warned EU finance ministers that loosening stablecoin rules could weaken bank lending and complicate monetary policy, even as policymakers debate whether Europe risks falling behind dollar-backed tokens.
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- European Union
- Europe
- Central Bank
- ECB
- Stablecoin
- Euro
- Regulation
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