As was previously reported, European Central Bank (ECB) President Christine Lagarde is not a believer in privately issued stablecoins. In a speech delivered at the Banco de España LatAm Economic Forum in Spain, Largarde declared that Euro stablecoins are vulnerable to sudden runs during periods of market stress, similar to past crypto incidents.
Largarde is also of the opinion that stablecoin growth could siphon deposits away from traditional banks. The US is having a similar debate over stablecoin yield potential, with it serving as a central dispute in the passage of crypto market infrastructure legislation.
“…stablecoins need to be assessed alongside the trade-offs,” says Lagarde. She believes that this includes the potential to harm financial stability and to affect EU monetary policy transmission.
In the US, administration officials see dollar-based stablecoins as fueling the dominance of the US dollar as the world’s reserve currency, boosting purchases of US Treasuries while ensuring user privacy. Stablecoins are viewed more as an upgrade to the current payment system with additional benefits.
Bitget Wallet COO, Alvin Kan, worries that Largade’s hesitance to embrace privately issued stablecoins may lead to a “split market” in which payments, including remittances, DeFi, and more, run on dollar-based stablecoins like USDC (Circle) and USDT (Tether).
Bitget Wallet is a leading decentralized, non-custodial multi-chain wallet that supports more than 130 blockchains and reports 90 million+ users globally.
Kan sees Lagarde’s stance as potentially shaping Europe’s crypto market over the next 3–5 years, with the ECB risks moving too slowly as stablecoins become increasingly embedded in global payments and DeFi infrastructure.
“Regulated euro stablecoins can address many of the transparency and reserve concerns under Europe’s stricter MiCA rules. But the bigger issue is adoption: if Europe does not support scalable euro stablecoins, users and developers will continue relying on USDC and USDT because that is where liquidity and network effects already exist,” says Kan.
Kan states that Europe is building a robust institutional blockchain infrastructure, but retail stablecoin adoption may lag.
“The likely outcome is a market where tokenized finance grows inside Europe while everyday crypto payments and DeFi continue running largely on dollar-based stablecoins. Dollar stablecoins are already deeply embedded in global payments, remittances, and DeFi because they work today and have scale. By the time Europe’s long-term infrastructure is fully deployed, those network effects may be even harder to challenge.”
Meanwhile, the ECB is planning to launch a central bank digital currency (CBDC) by 2029. Finalization of rules is expected for later this year, with a pilot commencing in 2027. The digital Euro is being designed as a retail CBDC, including payments, transfers, and P2P transactions. This, of course, may raise privacy concerns, which effectively has killed a CBDC in the US.
