The European Central Bank opposed a proposal to give euro stablecoin issuers access to ECB liquidity during an informal EU meeting in Cyprus. According to Reuters, which cited three sources, ECB President Christine Lagarde and other central bankers directly rejected the idea.
The proposal came from the Brussels-based think tank Bruegel. A policy note signed by Lucrezia Reichlin, Bo Sangers and Jeromin Zettelmeyer was discussed during the two-day meeting of EU finance ministers and central bank governors in Cyprus. The authors argued that more flexible rules and ECB backing were necessary for the euro stablecoin market to emerge from the shadow of dollar-denominated tokens.
Lagarde and the officials accompanying her did not support this approach. They stressed that if stablecoin issuers were to withdraw large-scale deposits from European banks, banks’ funding costs could rise and credit supply could decline. Several officials also opposed the idea of turning the ECB into a structure that provides guarantees for stablecoin firms; such a role has traditionally been reserved only for supervised banks. Finance ministers, meanwhile, reportedly failed to reach a consensus.
Lagarde’s stance was not particularly surprising. A few days earlier, speaking at a Banco de España forum, the ECB president had said that “the case for promoting euro-denominated stablecoins is much weaker than it appears.” Lagarde has made it clear that she prefers tokenized commercial bank deposits and the ECB’s wholesale payment projects, Pontes and Appia. She wants private stablecoin issuers to remain outside the central bank’s protective perimeter.
“Digital Dollarization” Debate
Bruegel approached the issue from a competition perspective. The think tank warned that if EU rules remain heavier than the GENIUS Act, which came into force in the United States in July 2025, both issuance and trading activity could move offshore. It described the possible result as “digital dollarization.”
Central bankers at the meeting did not give much weight to this warning. Instead, they argued that redemption restrictions should apply to all stablecoins, regardless of origin. Their reasoning was clear: without such a safeguard, European branches could face serious liquidity pressure if foreign investors tried to redeem reserves en masse.
As this debate continues, the European Commission is reviewing the Markets in Crypto-Assets Regulation, known as MiCA, which has been in force since 2024. MiCA requires stablecoin issuers to keep a large share of their reserves in bank deposits and liquid assets. The U.S. framework contains lighter requirements; supporters describe this approach as a strategy to preserve dollar dominance through regulated tokens.
Banks Are Moving Ahead
While the regulatory debate remains unresolved, private issuers are not staying on the sidelines. The Amsterdam-based Qivalis consortium has brought together 37 banks from 15 countries and aims to launch a MiCA-compliant euro stablecoin in the second half of 2025. ABN Amro, Rabobank, Nordea and Intesa Sanpaolo recently joined the founding partners, which already included BNP Paribas, ING, UniCredit, CaixaBank and Danske Bank. Reuters also framed Societe Generale’s earlier, smaller-scale steps within this broader trend.
Bruegel’s research, based on Artemis data, shows that global stablecoin supply increased by roughly one-third in 2025, reaching $300 billion. Euro-denominated tokens account for only 0.3% of that total; the largest player is Circle’s EURC. Still, stablecoin transactions based in Europe made up 38% of global volume in the final quarter of 2025, a striking figure when compared with their market share.
Digital Euro Remains on the Agenda
The ECB continues to work on the digital euro with a 2029 target. At the Nicosia meeting, EU finance ministers confirmed that the project would move forward. European banks had previously kept their distance from a retail CBDC, arguing that it could drain deposits from the banking system. The concerns now being raised over private stablecoins point to the same underlying issue.
