What did ECB board member Isabel Schnabel warn about stablecoins?

Isabel Schnabel warned that stablecoins could import traditional financial-market vulnerabilities into tokenised finance. She argued that while stablecoins offer innovation, they may also create risks linked to bank runs, fire sales and disruptions to monetary policy.

Why does the ECB compare stablecoins to money market funds?

Schnabel said stablecoins share characteristics with money market funds because both are designed to maintain stable value while investing in reserve assets. This structure can create liquidity and redemption risks during periods of market stress.

How could stablecoins strengthen US dollar dominance?

According to Schnabel, most stablecoins currently in circulation are denominated in US dollars. As tokenised finance expands, wider stablecoin adoption could further reinforce the dollar's position as the dominant global currency.

Why is the ECB concerned about dollar-backed stablecoins?

The ECB fears that growing use of dollar-backed stablecoins could reduce the role of the euro in digital finance and limit Europe's monetary sovereignty. Policymakers are concerned that private digital dollars could gain influence over payments and financial markets.

What is the ECB's proposed alternative to stablecoins?

The ECB supports the development of a digital euro and tokenised central bank settlement infrastructure. Officials argue that public money issued by central banks can provide innovation while maintaining financial stability and monetary control.

What is the Appia roadmap announced by the ECB?

The ECB's Appia initiative is designed to support Europe's tokenised financial markets. The project includes Pontes, a distributed ledger settlement bridge that will connect tokenised assets with the Eurosystem's existing TARGET payment infrastructure.

How does this debate relate to MiCA regulation?

The European Union is currently reviewing its Markets in Crypto-Assets (MiCA) framework. The review is examining whether existing stablecoin and crypto rules should be adjusted to improve competitiveness while maintaining financial stability.

What changes is Coinbase proposing for MiCA?

Coinbase has argued that MiCA should allow greater flexibility around stablecoin reserves, rewards and issuance structures. The company believes these changes could help euro-denominated stablecoins compete more effectively with dollar-backed alternatives.

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ECB warns stablecoins import market risks

Written by Jon CuthbertPublished Jun. 1 2026Last Updated Jun. 1 2026

European Central Bank Executive Board member Isabel Schnabel warned that stablecoins could bring traditional financial-market risks into tokenised finance while further strengthening the global dominance of the US dollar.

Speaking at the 2026 Bank of Korea International Conference on Central Banks and the Future of Money in Seoul, Schnabel compared stablecoins with money market funds, arguing that both offer innovation but also create risks linked to bank disintermediation, runs, fire sales and monetary policy transmission.

“The growing use of stablecoins may further cement the international dominance of the U.S. dollar,”

Said European Central Bank Executive Board member, Isabel Schnabel.

Schnabel said the Eurosystem’s response centres on developing a retail digital euro alongside tokenised wholesale central bank money, with the ECB’s Appia roadmap and the Pontes settlement bridge forming key components of Europe’s tokenised financial market infrastructure.

“Central banks cannot remain passive observers of these developments,”

Schnabel said, adding that private forms of money can shape the financial system in ways that may be difficult to reverse once widely adopted.

The comments follow similar remarks from ECB President Christine Lagarde, who argued in May that Europe should strengthen tokenised settlement infrastructure backed by central bank money rather than rely on euro-denominated stablecoins to enhance the currency’s international role.

The debate comes as the European Commission reviews the European Union’s Markets in Crypto-Assets Regulation, with industry participants including Coinbase calling for changes to stablecoin reserve requirements and incentives, while the ECB continues to caution that loosening the rules could weaken bank lending and complicate monetary policy.