ECB President Says MiCA Protects Europe but Flags Stablecoin Reserve Risks

Lagarde emphasized that the ECB does not see itself as a “role model” for markets, but rather as an anchor of stability for the European financial system.

She stressed that maintaining confidence and resilience remains the central bank’s primary responsibility as new forms of money and payment technologies continue to emerge.

Digital Euro Still Under Review

Turning to the digital euro, Lagarde underlined that the project remains a work in progress and is still being evaluated. She explained that any eventual digital euro must be practical and widely accessible, rather than complex or expensive to use.

According to Lagarde, the ECB envisions a digital euro that is fast, efficient, and respectful of user privacy, while also being capable of functioning both online and offline. Cost efficiency was highlighted as a key requirement, alongside ease of use for everyday transactions.

She also noted that the future of the digital euro is no longer solely in the hands of the ECB. The next steps now depend on discussions and decisions by European lawmakers, with both the European Council and Parliament playing a decisive role in whether and how the project moves forward.

Stablecoins and Monetary Sovereignty

Lagarde was also asked whether the rapid growth of stablecoins poses a risk to Europe’s monetary sovereignty. In response, she pointed to the European Union’s Markets in Crypto-Assets (MiCA) framework, describing it as a major advantage for the bloc.

She said MiCA allows regulators to supervise stablecoins effectively and ensures that compliant instruments can operate within clear rules. In that context, stablecoins that meet MiCA requirements can serve as legitimate payment alternatives and may even offer certain benefits for users and markets.

However, Lagarde drew a clear line when it comes to risks linked to issuance and reserve backing. Her main concern centers on the fact that stablecoin issuance could expose European reserves to foreign currencies, depending on how and where those assets are backed.

This exposure, she warned, could become a vulnerability under the MiCA framework if not carefully monitored. Lagarde stressed that regulators must remain highly vigilant, particularly when stablecoin structures could lead to capital outflows or unintended currency dependence.

She concluded by saying that while innovation in payments is welcome, authorities need to remain extremely attentive to potential risks, ensuring that financial stability and monetary sovereignty are not compromised as the market evolves.

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