Implications of stablecoins for the euro area

22 September 2020

How could stablecoins affect monetary policy, financial stability, market infrastructure, payments and banking supervision in the euro area? A new ECB occasional paper sheds light on the topic.

The paper assesses the implications of stablecoins for the euro area based on three scenarios, depending on their uptake: (i) as an accessory function of crypto-assets, (ii) as a new payment method, and (iii) as an alternative store of value. It concludes that the Eurosystem could rely on appropriate regulation, oversight and supervision frameworks to manage the possible implications under these scenarios.

When it comes to regulation and oversight, the paper recommends following the approach of “same business, same risks, same rules”, irrespective of the underlying technology or provider. This would secure a level playing field in the financial industry.

Stablecoins are defined as a new type of digital asset that uses stabilisation mechanisms which can minimise price fluctuations. The ECB will continue to monitor their evolution with the aim of responding to rapid change in any probable scenario.