Digital euro at a standstill. Meeting informally in Nicosia this Friday, European finance ministers heard two radically opposing voices on the stablecoins in euros. On the one hand, the Bruegel think tank calls for relaxing the rules and letting Europe play in the big leagues. On the other hand, Christine Lagarde and the ECB clearly rejected the request. Result: the status quo, while the digital dollar advances.
The key points of this article:
European finance ministers have faced divergent opinions regarding euro stablecoins, with a worrying status quo as the digital dollar advances. The Bruegel think tank proposed ambitious measures to strengthen euro stablecoins, but Christine Lagarde and the ECB rejected these ideas for fear of a weakening of the banking system.
What Bruegel proposed: liberating the European stablecoin
The scenario presented by Bruegel’s economists Lucrezia Reichlin, Bo Sangers and Jeromin Zettelmeyer was ambitious. For countering the overwhelming dominance of dollar-backed stablecoinsthey proposed to relax the liquidity requirements imposed on crypto issuers under the MiCA regulation, and to go even further: giving stablecoin issuers access to refinancing from the ECB, a privilege previously reserved for regulated banks. The basic argument is solid. Euro stablecoins currently only represent 0.3% of global supplythe largest of them, Circle’s EURC, only ranked 20th in the world. For comparison, the overall supply of stablecoins grew by a third last year to reach 300 billion dollarsaccording to the Artemis data cited by Bruegel. However, Europe generated 38% of global stablecoin transactions in the last quarter of 2025, but in dollars, not in euros. The risk pointed out by Bruegel is that of “digital dollarization” : a Europe which massively uses dollar stablecoins, without ever developing its own infrastructure. A de facto monetary dependence, due to lack of regulation.
Why the ECB said no
Lagarde and the central bankers present bluntly dismissed the proposal, according to a Reuters report on the Nicosia meeting. Their central argument: when a user buys a stablecoin, their money leaves the bank balance sheet to go to the issuer. On a large scale, this movement weakens bank deposits, increases the cost of financing and mechanically reduces the ability of banks to lend. Which amounts to weakening the main channel of transmission of the ECB’s monetary policy. Several central bankers have also openly rejected the idea of transforming the ECB into lender of last resort for stablecoin companies, an institutional red line difficult to cross. Lagarde had already expressed her preference this month for an alternative: tokenized bank depositswhich would combine the security of traditional accounts with the speed and programmability of blockchain, without moving deposits out of the banking system.
MiCA vs GENIUS Act: Europe already behind?
The international regulatory context complicates the European position. The MiCA regulation, in force since 2024, requires issuers of stablecoins to hold a large part of their reserves in bank deposits and liquid assets, significant constraints. In the United States, the GENIUS Act passed in 2025 deliberately chose lighter requirements, designed to support the global role of the dollar via regulated tokens backed by the greenback. The regulatory gap is therefore real, and it works in Washington’s favor. However, on the European side, a consortium of 37 banks united under the Qivalis project still plans to launch a stablecoin in euros later this year, within the current framework of MiCA. An initiative to follow, even if its scope remains modest compared to the dollar giants. The digital euro remains planned for 2029 at the earliest, an eternity on the scale of crypto markets. Europe holds 38% of global stablecoin transactions. It emits 0.3%. This figure alone sums up the European paradox: a mass of users, zero digital monetary sovereignty. The ECB may be right about the risks. But while she says no, the digital dollar says yes, and it moves forward.