EU Warns of Financial Instability Due to US Stablecoins

European officials warn that the growing presence of US-backed stablecoins could pose a serious risk to the stability of the euro and Europe’s financial sovereignty. The European Central Bank (ECB) is therefore urging the acceleration of the digital euro project to prevent these risks, as concerns grow about American financial institutions integrating stablecoins into traditional banking services.

The European Stability Mechanism (ESM) has also expressed its concern over recent US decisions allowing national banks to offer stablecoin services without prior approval from regulators. ESM Managing Director, Pierre Gramegna, believes that the EU must act quickly to safeguard its financial independence. Gramegna stated the following during a Eurogroup meeting:

“If major American tech companies launch large-scale payment solutions with dollar-backed stablecoins, this could undermine the monetary sovereignty and financial stability of the eurozone.”

ECB not concerned about American stablecoins for the first time

This is not the first time the ECB has warned that dependence on US-backed stablecoins could weaken the euro, making Europe more dependent on the US dollar. Gramegna’s comments align with previous warnings from ECB official Piero Cipollone. He emphasized in February that the Trump administration’s support for stablecoins is increasing pressure to accelerate legislation for the digital euro, reinforcing the need for an alternative. Cipollone indicated:

“The US sees stablecoins as a way to strengthen the global influence of the dollar, but the ECB is concerned that they could disrupt the European financial system.”

In addition, the ESM supports the ECB’s initiative to launch a digital euro, as well as the efforts of the European Commission to update the MiCA directive (Markets in Crypto-Assets). These are intended to prevent European companies and consumers from becoming too dependent on American stablecoins.

Meanwhile, the US government and financial institutions are increasingly embracing crypto, particularly stablecoins tied to the US dollar. Federal Reserve Governor Christopher Waller recently stated that stablecoins could strengthen the role of the dollar in the global financial sector. Federal Reserve Chairman Jerome Powell also supports regulation to responsibly integrate stablecoins into the financial system.

New regulations currently allow US banks to offer stablecoin services, which could accelerate their global dominance. There are even reports that Bank of America (BoA) is exploring the launch of its own stablecoin, while Circle CEO Jeremy Allaire advocates for mandatory registration of stablecoin issuers in the US.

Moreover, the increasing dependence on American stablecoins raises geopolitical concerns. The dominance of the dollar in digital payments could increase as American financial institutions further integrate stablecoins into their services, potentially reducing the global role of the euro.

For this reason, European policymakers are calling for strict regulation and a faster rollout of the digital euro to counter these risks. The current debate on stablecoins reflects the broader financial power struggle, with Europe trying to maintain monetary control while the US further strengthens its influence through crypto-driven financial systems.