Stablecoin Market Growth and Potential Risks
European Central Bank (ECB) Governing Council member and Dutch central bank governor Olaf Sleijpen has warned that a potential run on major stablecoins could force the ECB to reconsider its monetary-policy trajectory, with significant implications for Europe’s broader economy and inflation outlook.
His remarks, reported by the Financial Times, come at a time when dollar-denominated stablecoins have expanded rapidly, intensifying concerns about cross-border financial stability.
According to Sleijpen, the market value of U.S. dollar stablecoins has surged 48% this year, reaching more than $300 billion. Many of these tokens are backed by U.S. Treasury bills or other liquid dollar assets.
While that backing is meant to ensure stability, Sleijpen cautioned that it could also create a vulnerability: in a crisis, mass redemptions could force issuers to liquidate large volumes of Treasuries at once, triggering rapid price movements in global markets.
Impact on Global and European Markets
Such a scenario, he argued, would not remain contained within the digital-asset sector. A disorderly sell-off of U.S. government debt could spill over into global funding markets, affecting borrowing conditions and exchange rates.
In Europe, this could ultimately influence inflation dynamics and financial conditions, potentially compelling the ECB to adjust its interest-rate path in response.
Evolving Role of Stablecoins
Sleijpen stressed that stablecoins have grown to a point where their use extends far beyond crypto trading. Their increasing integration into payment flows and financial infrastructure means the risks associated with them can no longer be viewed as niche or isolated.
Monetary Policy Implications
While he did not specify whether such a shock would force the ECB to raise or cut rates, he made clear that a severe stablecoin disruption would complicate the central bank’s plans. “You could end up in a situation where we would need to rethink our interest-rate decisions,” he said.
Regulatory Outlook
The warning underscores the urgency for stronger global oversight of stablecoins, particularly as regulatory frameworks in Europe and the U.S. evolve. Analysts expect the ECB to intensify its monitoring as stablecoin adoption continues to rise.