Speaking at the Banco de Espana LatAm Economic Forum, Lagarde said Europe should focus on central bank-led digital finance infrastructure instead of privately issued stablecoins. Her comments come as a consortium of 12 European banks moves forward with plans to launch a MiCA-regulated euro stablecoin in 2026.
Christine Lagarde Warns Against Euro Stablecoins
Christine Lagarde once again reinforced her opposition to euro-denominated stablecoins, and warned that the risks tied to these digital assets could outweigh any potential benefits for Europe’s financial system and monetary sovereignty.
Speaking at the Banco de Espana LatAm Economic Forum on Friday, the European Central Bank president argued that Europe should avoid simply copying the stablecoin models that emerged in other regions, particularly those tied to the US dollar.
Christine Lagarde
Lagarde specifically challenged the argument that Europe needs its own strong euro stablecoin ecosystem in order to stay competitive in global digital finance markets. Her comments seemed to directly counter the stance taken earlier this year by Joachim Nagel, who publicly supported the development of euro-backed stablecoins in February.
According to Lagarde, the supposed advantages of stablecoins are often overstated. She explained that while stablecoins may help extend the global reach of a reserve currency, the technological benefits associated with digital payments and tokenized finance can still be achieved through public financial infrastructure backed by central bank money instead of privately issued digital tokens.
Lagarde also pointed to several risks associated with stablecoins, including the possibility of bank runs, de-pegging events, and financial fragmentation. She specifically referenced the turmoil surrounding the 2023 collapse of Silicon Valley Bank collapse and its impact on USD Coin as an example of how quickly confidence in stablecoins can deteriorate during periods of financial stress.
Another major concern raised by Lagarde involves deposit substitution, where consumers move money out of traditional bank deposits and into stablecoins. She argued that this could weaken Europe’s banking system, which relies heavily on banks to transmit monetary policy and provide lending to the economy.
The ECB president also referenced a March ECB working paper warning that adoption of stablecoins, especially those linked to foreign currencies, could threaten euro-area monetary sovereignty and create even more systemic risks for banks.
Rather than supporting privately issued euro stablecoins, Lagarde said Europe should focus on building digital financial infrastructure through central bank-led initiatives.
Despite Lagarde’s skepticism, momentum behind euro stablecoins is growing in the private sector. A consortium of 12 major European banks operating under the Netherlands-based joint venture Qivalis is reportedly working toward launching a MiCA-regulated euro-denominated stablecoin in the second half of 2026.
