Stablecoins Could Undermine European Banks, ECB Advisor Warns
The post Stablecoins Could Undermine European Banks, ECB Advisor Warns appeared on BitcoinEthereumNews.com. ECB warns stablecoins threaten eurozone’s monetary control, urging urgent regulation, euro-backed alternatives, and digital innovation to maintain sovereignty. Stablecoins are rapidly emerging as a significant force in global finance. According to a new blog post by Jürgen Schaaf, advisor to the European Central Bank (ECB), they now pose a strategic threat to the euro. In his article, titled “From Hype to Hazard: What Stablecoins Mean for Europe,” Schaaf cautions that unless a strong reaction is taken, Europe will lose its monetary sovereignty and financial stability. Stablecoins Threaten Bank Deposits and Lending Capacity Stablecoins are cryptocurrencies designed to maintain a stable price. The majority of them, such as Tether (USDT) or USD Coin (USDC), are pegged to the U.S. dollar. The aggregate share of both of them is 99% of the stablecoin market. In the meantime, the stablecoins that are backed by euros are too small, having a total market value of less than 350 million euros. These stablecoins are increasingly finding their way into the traditional finance system, which is a concern to ECB. Stablecoins are starting to be used or considered by companies such as Visa, Mastercard, Amazon, and Walmart to use in payments and savings. Such an increased adoption poses a threat to the banks because individuals may begin to utilize stablecoins over regular savings accounts. In case of that, banks may lose deposits and then they will find it difficult to extend loans. Moreover, widespread adoption of the stablecoins pegged to the dollar may also be beneficial to the U.S. It can enable the U.S. government to borrow at a cheaper rate and strengthen its financial powers. Instead, Europe might have to pay more expensive loan rates and lose the power to regulate its currency.The Bank of International Settlements (BIS) has cautioned that stablecoins could weaken a…
The post Stablecoins Could Undermine European Banks, ECB Advisor Warns appeared on BitcoinEthereumNews.com.
ECB warns stablecoins threaten eurozone’s monetary control, urging urgent regulation, euro-backed alternatives, and digital innovation to maintain sovereignty. Stablecoins are rapidly emerging as a significant force in global finance. According to a new blog post by Jürgen Schaaf, advisor to the European Central Bank (ECB), they now pose a strategic threat to the euro. In his article, titled “From Hype to Hazard: What Stablecoins Mean for Europe,” Schaaf cautions that unless a strong reaction is taken, Europe will lose its monetary sovereignty and financial stability. Stablecoins Threaten Bank Deposits and Lending Capacity Stablecoins are cryptocurrencies designed to maintain a stable price. The majority of them, such as Tether (USDT) or USD Coin (USDC), are pegged to the U.S. dollar. The aggregate share of both of them is 99% of the stablecoin market. In the meantime, the stablecoins that are backed by euros are too small, having a total market value of less than 350 million euros. These stablecoins are increasingly finding their way into the traditional finance system, which is a concern to ECB. Stablecoins are starting to be used or considered by companies such as Visa, Mastercard, Amazon, and Walmart to use in payments and savings. Such an increased adoption poses a threat to the banks because individuals may begin to utilize stablecoins over regular savings accounts. In case of that, banks may lose deposits and then they will find it difficult to extend loans. Moreover, widespread adoption of the stablecoins pegged to the dollar may also be beneficial to the U.S. It can enable the U.S. government to borrow at a cheaper rate and strengthen its financial powers. Instead, Europe might have to pay more expensive loan rates and lose the power to regulate its currency.The Bank of International Settlements (BIS) has cautioned that stablecoins could weaken a…
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