The European Central Bank (ECB) reiterated its warning about the global risks posed by stablecoins, raising the tone following November 2025 remarks by officials such as President Christine Lagarde and Governor Olaf Sleijpen. According to the ECB, the rapid adoption of tokens pegged to foreign currencies can unleash strains on bank liquidity and on the effectiveness of monetary policy. The institution frames these developments as a source of systemic vulnerability with potential spillovers for the euro area.
The ECB identifies channels through which stablecoins can siphon off retail deposits, reducing the stable funding base of European banks and forcing institutions to turn to more volatile liquidity sources. This reallocation of deposits could increase funding costs and heighten the sector’s sensitivity to market stress.
The growth of dollar-denominated stablecoins—reported to have risen 48% in 2025 to exceed an approximate capitalization of $300 billion—poses a risk to monetary sovereignty and the transmission of ECB policy. The ECB cautions that the expansion of tokens pegged to foreign currencies may weaken the effectiveness of euro area monetary tools.
The ECB underscores the possibility of a digital “run,” with massive redemptions forcing issuers to liquidate reserves at “fire sale” prices. Citing precedents such as the collapse of TerraUSD in May 2022, the analysis warns that such dynamics could disrupt highly liquid asset markets; the largest stablecoins concentrate reserves comparable to significant money market funds, with relevant exposure to U.S. Treasury bills.
The institution also warns about cross-border regulatory arbitrage in models with joint issuers from the EU and third countries. When European investors favor tokens issued under community rules during times of stress, issuers might not have sufficient EU-supervised reserves to satisfy both European and non-European holders, amplifying risk within the euro area.
Key risks highlighted by the ECB
The ECB and multilateral entities demand coordinated regulatory frameworks. The Bank for International Settlements (BIS) classified stablecoins as a source of systemic risk in its 2025 annual report and promoted tokenization accelerated by central banks as a regulated alternative.
In the EU, the MiCA framework and warnings from the European Systemic Risk Board are positioned to mitigate vulnerabilities, while divergence of approaches with the United States exposes a dilemma about whether the future of money will be predominantly private or centralized.
In operational and user-protection terms, the ECB focuses on reserve transparency, robust redemption mechanisms and safeguards against fraud, warning that the absence of these elements erodes trust and increases the likelihood of digital panics.
The ECB’s warning highlights a heterogeneous picture of risks—banking, monetary policy, market and operational—that require international regulatory responses.
