{"id":6122,"date":"2025-07-29T09:56:58","date_gmt":"2025-07-29T09:56:58","guid":{"rendered":"https:\/\/bitunikey.com\/news\/ecb-advisor-sounds-alarm-on-growing-dominance-of-dollar-denominated-stablecoins\/"},"modified":"2025-07-29T09:56:59","modified_gmt":"2025-07-29T09:56:59","slug":"ecb-advisor-sounds-alarm-on-growing-dominance-of-dollar-denominated-stablecoins","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/ecb-advisor-sounds-alarm-on-growing-dominance-of-dollar-denominated-stablecoins\/","title":{"rendered":"ECB advisor sounds alarm on growing dominance of dollar-denominated stablecoins"},"content":{"rendered":"<div class=\"post-detail__content blocks\">\n<p class=\"is-style-lead\">ECB advisor J\u00fcrgen Schaaf warns that the rapid rise of dollar-backed stablecoins threatens Europe\u2019s financial stability and the euro\u2019s global standing unless strategic action is taken.<\/p>\n<div id=\"cn-block-summary-block_3c7775e1b1c768c48c3d0b2de630e95b\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>US dollar-backed stablecoins make up 99% of the market, while euro-based stablecoins remain negligible.<\/li>\n<li>Growing adoption of stablecoins for payments, settlements, and savings could weaken the ECB\u2019s control over monetary policy.<\/li>\n<li>Interest-bearing stablecoins risk diverting deposits from traditional banks, threatening credit availability in Europe.<\/li>\n<li>Schaaf\u2019s call to action includes supporting euro-based stablecoins, advancing the digital euro, and innovating cross-border payments with distributed ledger technology.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>In a new <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.ecb.europa.eu\/press\/blog\/date\/2025\/html\/ecb.blog20250728~e6cb3cf8b5.en.html?s=09\" target=\"_blank\">blog post<\/a> on the European Central Bank\u2019s website titled \u201cFrom Hype to Hazard: What Stablecoins Mean for Europe,\u201d ECB advisor J\u00fcrgen Schaaf says that stablecoins pose a strategic threat to the euro\u2019s global standing, warning that \u201cwithout a strategic response, European monetary sovereignty and financial stability could erode.\u201d<\/p>\n<p>Stablecoins, led by Tether (USDT) and Circle\u2019s USD Coin (USDC), now account for 99% of the stablecoin market cap, nearly all denominated in US dollars. Euro-denominated stablecoins remain marginal, with a combined market cap of less than \u20ac350 million.<\/p>\n<figure class=\"wp-block-image size-full\"><picture decoding=\"async\" class=\"wp-image-14400817\"><source type=\"image\/webp\" ><\/source><\/p>\n<\/picture><figcaption class=\"wp-element-caption\">Source: From hype to hazard: what stablecoins mean for Europe | <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.ecb.europa.eu\/press\/blog\/date\/2025\/html\/ecb.blog20250728~e6cb3cf8b5.en.html?s=09\" target=\"_blank\">The ECB Blog<\/a><\/figcaption><\/figure>\n<p>The danger, Schaaf warns, is not just speculative. As stablecoins become more widely adopted for payments, settlement, and even savings, they increasingly bypass traditional financial systems\u2014potentially undercutting the ECB\u2019s ability to implement effective monetary policy. <\/p>\n<p>\u201cThe larger their footprint, the harder these [dollar-dominated stablecoins] would be to unwind,\u201d Schaaf writes. \u201cThis would mean higher financing costs relative to the United States, reduced monetary policy autonomy and geopolitical dependency\u201d for Europe.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h3 class=\"wp-block-heading\"><strong>Stablecoins\u2019 growing real-world impact and risks to banks<\/strong><\/h3>\n<p>Schaaf points out that stablecoins are already being tested for real-world applications beyond crypto trading, including remittances, e-commerce, and institutional settlement. U.S. firms such as Amazon and Walmart are exploring stablecoin integrations, while global payment giants Visa and Mastercard are rolling them into international services.<\/p>\n<p>Moreover, stablecoins begin to offer interest-like features, such as yield from lending or liquidity provision, which poses a threat to traditional banking models, especially in deposit-heavy economies like the euro area.<\/p>\n<p>\u201cIf interest-bearing stablecoins became common\u2026 they could divert deposits from traditional banks, which could jeopardise financial intermediation and hamper credit availability,\u201d Schaaf writes.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h3 class=\"wp-block-heading\">Schaaf\u2019s call to action to protecting the euro<\/h3>\n<p>To tackle the risks posed by stablecoins, Schaaf lays out several practical steps Europe should take to protect its financial system and strengthen the euro\u2019s global role. <\/p>\n<p>His main suggestion is to support well-regulated, euro-based stablecoins. Such stablecoins, he argues, could not only \u201cserve legitimate market needs\u201d but also help \u201creinforce the international role of the euro,\u201d offering a viable alternative to the growing dominance of dollar-based tokens.<\/p>\n<p>Another key part of the plan is the digital euro, which Schaaf sees as \u201ca robust line of defence of European monetary sovereignty,\u201d especially for everyday payments like shopping and online purchases.<\/p>\n<p>Schaaf also points to the need for innovation in larger, behind-the-scenes payments between banks and financial institutions. Cross-border payments are still slow and expensive. Schaaf argues that distributed ledger technology (DLT) could fix this by allowing faster, more direct settlement of tokenised assets using central bank money. He highlights two new projects from the European Central Bank\u2014Pontes and Appia\u2014as important steps forward.<\/p>\n<p>Finally, Schaaf stresses the importance of global cooperation. Without common rules, he warns, \u201cwe risk fuelling instability, regulatory arbitrage and global US dollar dominance.\u201d <\/p>\n<p>    <!-- .cn-block-related-link --><\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>ECB advisor J\u00fcrgen Schaaf warns that the rapid rise of dollar-backed stablecoins threatens Europe\u2019s financial stability and the euro\u2019s global standing unless strategic action is taken. Summary US dollar-backed stablecoins&hellip;<\/p>\n","protected":false},"author":1,"featured_media":5365,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6122","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/6122","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=6122"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/6122\/revisions"}],"predecessor-version":[{"id":6123,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/6122\/revisions\/6123"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/5365"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=6122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=6122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=6122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}