Christine Lagarde, President of the European Central Bank, raises concerns about the risks posed by multi-jurisdiction stablecoins and their potential impact on the EU financial system.
Risks of Multi-Jurisdiction Stablecoins
Lagarde highlights the risks associated with foreign stablecoins that could adversely affect the liquidity management system in the EU. She calls for tighter regulation and global coordination in this area.
Need for Compliance Standards
In her speech, Lagarde emphasized the necessity for equivalence requirements for foreign-issued stablecoins to avoid mismanagement of liquidity. She noted vulnerabilities linked to joint issuance frameworks in the EU and elsewhere.
Impact on EU Financial Stability
Lagarde pointed to potential threats that could arise in the event of stablecoin 'runs', including euro outflows and the resulting pressure on EU financial institutions. She called for effective safeguarding measures to address these challenges.
Lagarde's speech underscores the need for stringent compliance standards for foreign stablecoins and reflects ongoing efforts to protect the EU financial system from potentially destabilizing impacts of digital assets.
