European Central Bank’s Isabel Schnabel Says Stablecoins Risk Financial Stability

The European Central Bank has renewed its warning that stablecoins could threaten financial stability, banking intermediation, and monetary sovereignty. Speaking at the Bank of Korea’s international conference in Seoul, ECB Executive Board member Isabel Schnabel compared stablecoins to money market funds that disrupted banking in the 1970s, arguing that both attract funds away from banks while relying on reserve assets such as treasuries, repos, and bank deposits. Schnabel said the dominance of U.S. dollar-pegged stablecoins could reinforce American monetary influence at the expense of other currencies. The report says the global stablecoin market is about $320 billion, with Tether’s USDT at $188 billion and Circle’s USDC at about $75.8 billion, while Circle’s euro-denominated EURC has a supply of around $543 million. It also says euro stablecoin supply rose 48% over the past year and EURC transaction volume jumped more than 1,100% after MiCA took effect. The ECB continues to argue that a digital euro is the proper public-money alternative, but its pilot is not expected until the second half of 2027, with issuance not expected before 2029 at the earliest.