Denis Beau has warned that Europe must act fast to prevent stablecoins from weakening its financial system.
The senior official from the Banque de France said the rapid rise of mostly US dollar-backed stablecoins is creating both opportunity and risk. He stressed that without action, Europe could face growing “dollarisation” in its payment system.
Stablecoins are becoming a key part of digital finance, especially for payments and settlements. But Beau argues that the continent must protect its monetary system while still embracing innovation like tokenisation.
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He emphasized that Europe’s financial system should continue to rely on a balance between public money from central banks and private money from regulated institutions. This balance, he said, is essential to maintaining trust and stability as digital finance grows.
Source: bis.org
To respond effectively, the policymakers are focusing on three main strategies. These include upgrading central bank payment systems, supporting euro-based digital money from private institutions, and strengthening regulations across the sector.
The proposed MiCA Regulation has already positioned the European Union as a global leader in crypto regulation. However, Beau believes it still needs tightening, especially to limit the everyday use of foreign stablecoins and reduce risks from global issuers.
According to the Beau stablecoins issued by banks are generally safer than those from non-bank entities. So typically banks benefit from access to central bank liquidity and stricter supervision, and these makes them more reliable when they are faced with economical.stress.
Non-bank issuers on the other hand lack direct access to central bank systems, though this could change in the future under strict conditions.
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