ECB President Christine Lagarde has pushed back against the idea of promoting euro-denominated stablecoins as a way to counter US dollar stablecoin dominance. Instead, she's advocating for tokenised financial infrastructure anchored in central bank money, arguing that the case for euro stablecoins is weaker than it appears once you separate their monetary and technological functions.
Why Lagarde opposes euro-denominated stablecoins
The stablecoin market has exploded from less than $10 billion six years ago to more than $300 billion today. But the euro has been left out — close to 98% of stablecoins are denominated in US dollars, and nearly 90% are controlled by Tether and Circle. Lagarde argued that stablecoins perform two roles: a monetary function that extends a currency's reach, and a technological function that enables settlement on distributed-ledger infrastructure. Once you disentangle those, she said, the case for euro stablecoins gets much weaker.
She concluded that stablecoins aren't an efficient way to strengthen the euro's international role. Instead, deeper capital-market integration and a safe asset base would do more for the currency.
The risks she cited
Lagarde pointed to financial stability risks, using Circle's USDC as an example. During the Silicon Valley Bank collapse in March 2023, USDC briefly fell to $0.877 — a depeg that rattled markets. She also flagged monetary policy transmission risks: if retail deposits migrate out of bank accounts into non-bank stablecoins and then return to banks as wholesale funding, it could disrupt how policy moves through the system.
Tokenisation as a better path
While she was skeptical about stablecoins, Lagarde was constructive on tokenisation. She described DLT-based market infrastructure as transformative for Europe's fragmented financial system. The Eurosystem is already moving ahead: from September, it plans to offer wholesale settlement through the Pontes project, which links DLT platforms to TARGET for settlement in central bank money.
The strategy extends further. The Appia roadmap, published in March, lays out steps toward a fully interoperable European tokenised financial ecosystem. The target date is 2028.
With Pontes going live in September, the ECB is putting its weight behind infrastructure that uses central bank money directly on distributed ledgers. The Appia roadmap gives the industry a concrete timeline — five years to build out interoperability across the continent. Lagarde's message is clear: the euro's global role won't come from stablecoins, but from a tokenised system anchored in the central bank's own money.
