Global Stablecoins Pose Risks to a ‘Fragmented’ Europe

European Central Bank (ECB) board member Benoit Coeure has warned that global stablecoins remain untested and raise potential risks across multiple policy domains.

Coeure, a member of the ECB’s Executive Board, made his remarks at the Joint Conference of the ECB and National Bank of Belgium on Nov. 26, in a speech entitled “Crossing the chasm to the retail payments of tomorrow.”

Global stablecoins pose broad policy risks

Coeure’s speech was focused on the failure to establish a pan-European, market-led solution for digital retail payments.

Notwithstanding progress with back-end initiatives like SEPA and the TARGET Instant Payment Settlement (TIPS) system, no pan-European solution has made equivalent progress in point-of-sale and online payments, he said.

The EU is thus “at risk of losing its economic edge,” with national fragmentation paralyzing competition and stifling innovation on the pan-European level, in his view.

Twenty years after the introduction of the euro, this failure to harmonize cross-border payments services has spurred consumer interest in faster and cheaper alternatives and new ecosystems. Here he warned against the potential risks of Europe’s reliance on new global initiatives:

“Global stablecoin arrangements […] raise potential risks across a broad range of policy domains, such as legal certainty, investor protection, financial stability and compliance with anti-money laundering requirements. Public authorities have made clear that the bar will be set very high for these stablecoin initiatives to be allowed to operate.”

Couere continued to underscore that dependence on non-European global players generates a strategic risk to the “autonomy and resilience of European payments systems.”

Central banks should not stifle private sector

Coeure further noted that central banks will need to adapt their policies and instruments to respond to new consumer protection and monetary policy transmission challenges as emerging technologies…

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