• ECB President Christine Lagarde expressed skepticism about the need for digital currencies denominated in euros, warning that a euro-pegged stablecoin could hinder the ECB’s work and worsen financial turmoil.
  • Several large eurozone banks, including Societe Generale, are working on establishing euro-pegged crypto assets to break into a market dominated by the US dollar.
  • Lagarde said the evidence in favor of euro-denominated stablecoins is considerably weaker than it seems because such currencies are prone to investor runs during market turmoil.
  • She cited the drop in value of USD Coin during the collapse of Silicon Valley Bank as an example of risk.
  • ECB research showed that large-scale substitution of deposits for digital currencies could weaken corporate lending and monetary policy transmission.

Sources & Links