Best ECB Response to Stablecoins Is Digital Euro, Schnabel Says

Stablecoins pose a number of risks to financial stability and monetary policy, and the European Central Bank’s best response is to ensure that public money remains the anchor of the system, according to Executive Board member Isabel Schnabel.

While private monetary innovation like stablecoins can offer “significant benefits,” these instruments could also increase the risk of runs in the financial system in times of stress, weaken the transmission of interest-rate decisions and cement the international dominance of the dollar, she said Monday in Seoul.

Therefore “central banks and regulators need to be ready to adapt regulation, monetary policy ...