[Digital Today reporter Jinju Hong (홍진주)] The European Central Bank (ECB) warned that the spread of stablecoins could undermine financial stability and further strengthen a U.S. dollar-centred international monetary order. The ECB again stressed that building digital currency infrastructure issued or supported by central banks should take priority over private stablecoins.

Cointelegraph, a blockchain media outlet, reported on Sunday that ECB Executive Board member Isabel Schnabel (이사벨 슈나벨) outlined Europe’s response direction while pointing to the potential risks of stablecoins in a speech at the 2026 Bank of Korea International Conference in Seoul.

Schnabel compared stablecoins to money market funds (MMFs) in traditional financial markets. She warned that as tokenised finance expands, vulnerabilities in the existing financial system could shift to the digital asset market.

She explained that while stablecoins can be a means of promoting financial innovation, they can also carry risks such as weaker bank intermediation, large-scale withdrawals, asset fire sales and damage to the monetary policy transmission channel. She said the biggest concern was monetary sovereignty, adding that growing use of stablecoins could further entrench the U.S. dollar’s international dominance.

The global stablecoin market is currently dominated in effect by dollar-based tokens. Dollar-pegged stablecoins such as Tether (USDT) and USD Coin (USDC) account for most of the market, while the share of stablecoins based on other currencies, including the euro, is very limited.

The ECB sees that if this structure expands, the influence of U.S. monetary policy could be transmitted more strongly to other countries’ economies. It is concerned that if privately issued dollar stablecoins become a core means of international payments and asset transactions, central banks’ monetary policy autonomy could weaken.

The ECB is therefore pushing two pillars to respond to the era of digital finance. One is a “digital euro” for the general public, and the other is a wholesale tokenised central bank currency to be used for transactions between financial institutions.

The ECB released a roadmap in March for building a European tokenised financial market, called Appia. Within it, the Pontes project is tasked with linking a distributed ledger technology (DLT)-based payment network with the Eurosystem’s existing payment infrastructure, with a target launch in the third quarter of 2026.

Schnabel said, “Central banks cannot remain passive observers watching these changes,” stressing the need to modernise public money. She said that if privately issued digital currencies are widely adopted, they could change the financial system “in a way that is difficult to reverse.” She added that what matters is not blocking innovation itself, but embracing innovation within a framework that maintains financial stability and trust in money.

The remarks came as debate continues in Europe over stablecoin policy. ECB President Christine Lagarde (크리스틴 라가르드) also said last month that the most effective way to raise the euro’s international influence was not to expand euro stablecoins.

The European Union is currently reviewing MiCA, its crypto-asset market regulation framework. A public consultation will run until the end of August.

The crypto industry is calling for more flexible regulation. Coinbase’s head of policy for Europe and the Americas, Katie Harries (케이티 해리스), argued that MiCA should adjust reserve rules and issuance requirements to boost the competitiveness of euro-based stablecoins. She also stressed the need for clear institutional channels for compliant firms to access decentralised finance and global liquidity.

The ECB, in contrast, is drawing a line on regulatory easing. The ECB warned EU finance ministers last month that loosening stablecoin rules could weaken banks’ lending function and make monetary policy management more complicated. Separate from concerns about falling behind dollar-based tokens, the ECB is placing a higher priority on maintaining financial stability and monetary control.

Europe’s stablecoin policy is therefore expected to focus on where to strike the balance between competitiveness and financial stability. For now, the ECB is clearly signalling a stance of putting the digital euro and central bank payment infrastructure to the fore, while seeking to place the role of private stablecoins under stricter discipline.