As previously reported, European Central Bank (ECB) President Christine Lagarde does not believe in privately issued stablecoins. In a speech at the Banco de España LatAm Economic Forum in Spain, Largarde explained that Euro stablecoins are vulnerable to spikes during periods of market stress, similar to past crypto events.
Largarde also thinks that stablecoin growth could drive deposits away from traditional banks. The US has a similar debate over stablecoin yield potential, which serves as a central sticking point in the passage of crypto market infrastructure legislation.
“…stablecoins need to be evaluated with trade-offs,” says Lagarde. It believes this has the potential to harm financial stability and affect EU monetary policy transmission.
In the US, administration officials believe that dollar-based stablecoins fuel the dominance of the US dollar as the world’s reserve currency, increasing purchases of US Treasury bonds while ensuring user privacy. Stablecoins are seen more as an upgrade of the existing payment system with additional benefits.
Bitget Wallet COO, Alvin BloodHe worries that Largade’s hesitancy to adopt privately issued stablecoins could lead to a “fragmented market” where payments, including wires, DeFi, and more, are conducted through dollar-based stablecoins such as USDC (Circle) and USDT (Tether).
Bitget Wallet is a leading decentralized, non-custodial, multi-chain wallet that supports over 130 blockchains and reports over 90 million users worldwide.
Kan thinks Lagarde’s stance will potentially shape Europe’s crypto market over the next 3-5 years; ECB risks move very slowly as stablecoins become increasingly embedded in global payments and DeFi infrastructure.
“Regulated euro stablecoins could address many of the transparency and reserve concerns under Europe’s stricter MiCA rules. But the bigger issue is adoption: If Europe does not support scalable euro stablecoins, users and developers will continue to rely on USDC and USDT because liquidity and network effects are already there,” Kan says.
Kan notes that Europe is building a solid enterprise blockchain infrastructure, but retail stablecoin adoption may be delayed.
“The likely outcome is a market where tokenized finance grows within Europe, while daily crypto payments and DeFi continue to operate largely through dollar-based stablecoins. Dollar stablecoins are already deeply embedded in global payments, remittances, and DeFi because they work today and have scale. Once Europe’s long-term infrastructure is fully deployed, these network effects may be even harder to challenge.”
Meanwhile, the ECB plans to launch a central bank digital currency (CBDC) by 2029. The rules are expected to be finalized later this year and pilot implementation is expected to begin in 2027. The digital Euro is envisioned as a retail CBDC, including payments, transfers and P2P transactions. This, of course, could raise privacy concerns, effectively killing CBDC in the US.
