The European Central Bank (ECB) opposes proposals to relax regulatory requirements for euro‑denominated stablecoins. It warns that expanding euro stablecoin issuance may reduce bank lending and make it harder for the central bank to control interest rates. Earlier, Bruegel, an economic think‑tank based in Brussels, proposed easing liquidity requirements for crypto issuers and potentially granting them access to ECB financing, to help Europe develop a domestic market independent of US‑dollar‑backed stablecoins.

 Central bank officials including ECB President Christine Lagarde have voiced opposition, fearing stablecoin issuance will trigger bank deposit outflows and weaken banks’ funding sources. Bruegel warns that if EU regulations are significantly stricter than those in the United States, “digital dollarisation” could intensify.