The European Central Bank rebuffed a proposal Friday that would have eased liquidity requirements for euro stablecoin issuers and opened a path for them to tap ECB liquidity, according to a Reuters report citing three people familiar with the closed-door discussions.
The pitch came from a policy brief by Brussels think tank Bruegel, presented to EU finance ministers and central bank governors at a two-day informal meeting in Nicosia, Cyprus. The authors, Lucrezia Reichlin, Bo Sangers, and Jeromin Zettelmeyer, argued that more permissive rules and a backstop from the ECB are needed to grow a euro stablecoin market that remains a rounding error in a sector dominated by dollar tokens, per Reuters.
ECB President Christine Lagarde and several other central bankers pushed back on the proposal in the room, according to the report. They argued that letting stablecoin issuers pull deposits out of European banks at scale would raise lenders’ funding costs and curb their capacity to extend credit, Reuters said.
Several officials also balked at the idea of turning the ECB into a backstop for stablecoin firms, a role traditionally limited to supervised banks, per the report. Finance ministers themselves were reportedly split on the proposal.
The intervention extends a position Lagarde laid out earlier this month at a Banco de España forum, where she argued that any benefit a euro stablecoin might bring to the currency’s international standing is outweighed by the risks to financial stability and monetary-policy transmission. She has instead pointed to tokenized commercial bank deposits and the ECB’s Pontes and Appia wholesale settlement projects as the right onchain plumbing for Europe.
“The case for promoting euro-denominated stablecoins is far weaker than it appears,” she said.
“Digital dollarization” vs. deposit stability
Bruegel framed the question as a competitiveness one. The think tank’s authors warned that keeping EU rules tougher than the US GENIUS Act, signed into law in July 2025, will push issuance and trading offshore and accelerate what they called “digital dollarization,” per Reuters.
Central bankers at the meeting played down that concern, the report said. Instead, several pushed for redemption restrictions on stablecoins regardless of where they are issued, arguing that without such limits a European arm could face a run on reserves if foreign holders cashed out at scale.
The pushback lands as the European Commission reviews its Markets in Crypto-Assets Regulation (MiCA), in force since 2024, which requires stablecoin issuers to hold a large share of reserves in bank deposits and other liquid assets. The US framework imposes lighter requirements, an approach supporters frame as a way to lock in dollar dominance through regulated tokens, Reuters noted.
Bank-led euro stablecoins push ahead
The political fight is playing out as private issuers race to fill the euro-denominated gap on their own terms. The Qivalis consortium, an Amsterdam-based joint venture pursuing authorization from De Nederlandsche Bank, has grown to 37 banks across 15 countries and plans to launch a MiCA-compliant euro stablecoin in the second half of this year. The group counts BNP Paribas, ING, UniCredit, CaixaBank, and Danske Bank among its founders, and recently added ABN Amro, Rabobank, Nordea, and Intesa Sanpaolo.
Reuters cited the Qivalis launch alongside earlier, smaller efforts from Societe Generale as evidence that European banks are not waiting for the regulatory debate to settle.
Global stablecoin supply expanded by roughly a third in 2025 to $300 billion, per Artemis data cited in the Bruegel paper and flagged by Reuters. Euro-pegged tokens make up just 0.3% of that total, with Circle’s EURC the largest of the bunch. Europe-based stablecoin activity nonetheless punched above its weight in the final quarter of 2025, accounting for 38% of global transaction volume, Reuters said.
Digital euro still the ECB’s preferred path
The ECB still aims to launch a digital euro by 2029, and EU finance ministers reaffirmed at the Nicosia meeting that work on the project will continue, per Reuters. European banks have separately resisted that initiative on grounds that retail CBDC adoption could pull deposits out of the system, mirroring the funding concerns now being raised against private euro stablecoins.
For the ECB, that tension is the point. Lagarde’s preferred design keeps deposit-based money inside supervised banks while letting tokenized representations of those deposits ride on distributed-ledger rails alongside a future digital euro, leaving private stablecoin issuers outside the central bank’s protective perimeter.
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