ECB Should Launch Digital Euro to Counter Stablecoin Risks, Says Schnabel

According to Bloomberg, on June 1, Isabel Schnabel, member of the European Central Bank's Executive Board, stated that stablecoins pose multiple risks to financial stability and monetary policy transmission. Schnabel emphasized that the ECB's best response is to ensure public currency remains the system's anchor by launching the digital euro. She noted that while private monetary innovations like stablecoins offer significant benefits, they could increase bank run risks, weaken the effectiveness of interest rate decisions, and reinforce the international dominance of the U.S. dollar. Schnabel highlighted that the ECB's strategy depends on the digital euro as a retail central bank digital currency and tokenized central bank money as a wholesale CBDC.
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