[DigitalToday reporter Chi-gyu Hwang (황치규)] European Central Bank (ECB) President Christine Lagarde said Europe should build a tokenised payment infrastructure based on central bank money, rather than private stablecoins, to strengthen the euro’s international role.

Cointelegraph reported on May 8 that Lagarde said boosting euro-denominated stablecoins to counter dollar-pegged stablecoins was not Europe’s best option.

Lagarde, speaking at a Banco de Espana Latin American economy forum in Roda de Bera, Spain, stressed that stablecoins require separating monetary functions from technological functions. She said factors cited as stablecoin advantages span those two functions, but current discussions bundle them together.

She presented the Eurosystem’s Pontes project and Appia roadmap as alternatives for Europe. Pontes is a wholesale settlement project that links a distributed ledger technology-based platform to existing Eurosystem payment infrastructure so transactions are settled directly in central bank money. Appia is a plan unveiled in March that includes building an interoperable European tokenised financial ecosystem by 2028.

Lagarde said euro-denominated stablecoins operating under the European Union’s Markets in Crypto-Assets (MiCA) regulation could create additional global demand for euro zone safe assets. But she warned that financial stability risks could grow, including runs and vulnerabilities in reserve assets, and that monetary policy transmission could weaken if deposits move out of banks.