Stablecoins could force ECB to rethink monetary policy, key official warns

Stablecoins could pose a risk to financial stability and inflation in Europe that could compel the European Central Bank to reconsider its monetary policy, according to Dutch central bank governor Olaf Sleijpen.

During a recent interview with the Financial Times, Sleijpen brought attention to the rapid pace at which stablecoin issuance is growing within the United States, especially since President Donald Trump signed the GENIUS Act earlier this year, paving the way for private-sector issuance of dollar-backed digital tokens.

“If stablecoins in the US increase at the same pace as they have been increasing . . . they will become systemically relevant at a certain point,” Sleijpen said.

Since the GENIUS Act, the volume of dollar-pegged digital tokens has surged by over 48%, climbing past $300 billion. U.S. dollar-denominated stablecoins such as USDT and USDC are also increasingly being used for cross-border payments and trading activity, and hold the largest market share globally. The two largest stablecoins by market cap, Tether (USDT) and USD Coin (USDC), are both pegged to the U.S. dollar and dominate the stablecoin sector.

Many of these assets are backed by U.S. Treasuries, making them particularly sensitive to rapid sell-offs in times of economic stress.

“If stablecoins are not that stable, you could end up in a situation where the underlying assets need to be sold quickly,” Sleijpen continued, adding that it could trigger market disruptions serious enough for the ECB to “probably have to rethink monetary policy.”

He advocated for using financial stability tools as a first line of defense and acknowledged the uncertainty around how the ECB might respond, noting it was unclear whether the situation would call for a rate cut or a hike. 

“I don’t know in which direction we would be going,” he said.

Sleijpen, who is one of the 26 members of the ECB’s decision‑making body, is echoing concerns that have been flagged by the central bank’s officials time and again as the stablecoin market expands at a pace few policymakers had anticipated.

Earlier this year, ECB advisor Jürgen Schaaf warned that the rapid rise of dollar‑pegged stablecoins threatens Europe’s monetary sovereignty and financial stability in a structural way, and called for a strategic response to prevent the euro from losing ground to privately issued dollar‑based tokens.

Schaaf was particularly worried about the emergence of yield‑bearing stablecoins and the risk they pose to traditional banking models in deposit‑driven economies like the euro area.

“If interest-bearing stablecoins became common… they could divert deposits from traditional banks, which could jeopardise financial intermediation and hamper credit availability,” Schaaf wrote at the time.

Instead of stablecoins, the ECB has pushed for a digital euro, which it views as a sovereign and risk‑free alternative that can anchor Europe’s payment system. Last month, the central bank moved a step closer to that goal when it selected a group of external providers to support key components of the project, ranging from fraud and risk management to app development and the secure exchange of payment information.