Brussels – Not only trade tensions and geopolitical instability, but also cryptocurrencies, the digital currencies parallel to the current ones, are starting to weigh on financial and economic stability. An element that the European Central Bank and its president, Christine Lagarde, are looking at with concern. “With the foundations of global equilibrium under pressure, the international financial system is also entering uncharted territory,” Lagarde acknowledged during the hearing in the Economic Affairs Committee of the European Parliament, and in this context “a key element of this evolving landscape is the rapid rise of cryptocurrencies and stablecoins.”
Stablecoins are digital currencies pegged to the value of another asset, such as gold or a real currency. “Currently, 99 per cent of stablecoins are denominated in US dollars,” Lagarde points out. In essence, it is the US that directs the market for these new means of payment. Stablecoins “often serve as an entry point to crypto-assets and facilitate crypto-asset trading,” thanks to a value that is considered stable and reliable. In this way, stablecoins “attract users by promising faster and cheaper corporate and retail cross-border payments.”
The economy is moving on tracks that undermine the euro’s ambitions to be a reference currency. “For now, risks to euro area financial stability from cryptocurrencies appear limited,” Lagarde assures. However, she warns, “the rapid pace of developments, coupled with data gaps that could create blind spots, calls for closer monitoring.” Not least because in their current state, “stablecoins are privately issued and pose in particular risks to monetary policy and financial stability,” the ECB President further warns. Stablecoins must therefore “be governed by sound rules, especially when operating internationally”. That is, if the US wants to.
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This is another area of disagreement with the current Trump administration, which is focusing heavily on new forms of payment. It remains to be seen what rules the United States will impose, given that, as Lagarde explains, it is also working to establish its own regulatory framework. The underlying problem is precisely the lack of uniform rules. “This fragmented approach prevents a global level playing field and can open the door to new risks and systemic vulnerabilities,” the Eurotower chairwoman warns further. “We must therefore remain alert to developments in other jurisdictions and support globally aligned regulations for stablecoins.”
In this context, the project of an all-European payment system as an alternative to US electronic transactions becomes no longer postponable, and Lagarde wants to reiterate this clearly and unequivocally: “Accelerating progress towards a digital euro is a strategic priority.” This reform would be of twofold value. As she points out, “In addition to addressing some of the risks posed by stablecoins, a digital euro would help safeguard Europe’s bank-based financial and monetary system.”
ECB President Christine Lagarde at the Economic Affairs Committee [Brussels, 23 June 2025]
Not only: an alternative to parallel currencies pegged to the US dollar would allow the European single currency to compete for the role of global currency that the first von der Leyen Commission already wanted. At a time when internet transactions take place de facto bypassing the euro, the latter loses out in comparison with its main monetary adversary on a commercial level.
Lagarde insists that “The digital euro could offer a line of defence against the uncertainties posed by stablecoins,” as well as providing “more reliable, immediate, and cheaper payments” due to lower fees for using European infrastructure, as opposed to foreign ones—a further European response to Trump’s new America.
English version by the Translation Service of Withub
