ECB's Lagarde Flags Euro-Denominated Stablecoins as Financial Stability Risk on Friday, Diverging from Bundesbank

According to the European Central Bank, on Friday (May 8), President Christine Lagarde made her most direct case yet against euro-denominated stablecoins, arguing that risks to financial stability and monetary-policy transmission outweigh any benefit to the euro’s global standing. Speaking at the Banco de Espana LatAm Economic Forum in Spain, Lagarde diverged from Bundesbank President Joachim Nagel, who publicly backed a European stablecoin ecosystem in February. She cited specific trade-offs including bank runs and de-pegging events similar to the 2023 SVB-Circle episode, deposit substitution that narrows the bank lending channel, and broader fragmentation risks. Lagarde pointed instead to the ECB’s tokenized wholesale settlement projects as the appropriate infrastructure for Europe’s digital finance ambitions.