A senior European Central Bank (ECB) official has issued one of the strongest warnings yet about the risks posed by fast-growing stablecoins, saying a severe redemption wave could directly influence Europe’s monetary policy path.
Olaf Sleijpen, governor of the Dutch central bank and a member of the ECB’s Governing Council, cautioned that a large-scale run on stablecoins could disrupt financial markets so sharply that the ECB might be forced to reconsider its interest rate decisions.
Stablecoins Are Approaching “Systemic Relevance”
According to Sleijpen, U.S. dollar-denominated stablecoins have expanded 48% since the start of the year, lifting their combined market value to over $300 billion.
This rapid acceleration means that the sector is no longer a fringe element of crypto markets, but a potential point of vulnerability for the global financial system.
Once stablecoins reach systemic scale, shocks in their backing assets, typically U.S. Treasuries and commercial paper, could ripple into traditional markets far beyond crypto.
The Risk: A Run That Triggers Fire Sales
Sleijpen emphasized one specific scenario: mass redemptions.
If millions of users simultaneously redeem stablecoins for fiat, issuers may be forced to liquidate their reserves quickly.
This could spark fire sales in bond markets, destabilizing assets central banks rely on for policy transmission.
Such a chain reaction would likely cause liquidity stress, volatility in funding markets, and pressure on interest rates, all of which could compromise the ECB’s ability to maintain its intended monetary policy course.
Regulatory Gaps Add Another Layer of Risk
The European Systemic Risk Board (ESRB), led by ECB President Christine Lagarde, has already warned about the dangers of “multi-issuer” stablecoin models.
These systems allow fungible stablecoins to be issued both inside and outside the EU, enabling redemptions within European jurisdictions even if the coins were minted elsewhere under weaker safeguards.
This raises the possibility that EU-regulated issuers could face disproportionate reserve drain during times of stress, potentially creating liquidity shortages inside the bloc.
Europe Has MiCA But the U.S. Still Has No Federal Stablecoin Law
While the EU has implemented the Markets in Crypto-Assets (MiCA) framework, one of the world’s most comprehensive regulatory regimes for stablecoins, the United States has yet to pass federal legislation governing the sector.
This regulatory divergence worries European officials.
Without coordinated rules, large global stablecoins could funnel risk into Europe’s more tightly regulated markets, even if the instability originates elsewhere.
Monetary Policy Already Under Pressure
The ECB is currently navigating complex inflation dynamics and a fragmented economic outlook.
Sleijpen’s warning highlights that a sudden stablecoin shock could introduce an unpredictable new variable into an already delicate policy environment.
A disorderly redemption cycle could disrupt bond markets just as the ECB attempts to steer inflation back toward target levels, making its rate-setting process considerably harder.