ECB Warns U.S. Dollar Stablecoins May Undermine EU Monetary Control
Widespread adoption of U.S. dollar-denominated stablecoins in the EU may undermine the European Central Bank's (ECB) control over monetary policy, according to ECB adviser Jürgen Schaaf.
- U.S.-backed stablecoins could create challenges similar to those faced by developing economies under the influence of the U.S. dollar.
- These stablecoins, such as Tether's USDT and Circle's USDC, dominate the market, accounting for over 80% of a total market cap of $271.8 billion.
- The recent U.S. stablecoin law may lead to market growth reaching $2 trillion by 2028.
- Schaaf emphasized that U.S. dollar stablecoins could enhance U.S. economic advantages globally unless euro alternatives are developed.
- In cross-border transactions, these stablecoins may directly compete with euro-based options.
- To counter this challenge, more support for euro-backed stablecoins is recommended, along with the development of a digital euro.
China is also exploring the creation of a regulated offshore yuan (CNH) stablecoin in response to the increasing dominance of U.S. stablecoins.