European Central Bank President Christine Lagarde
warned that the EU must close gaps in stablecoin regulation to avoid
destabilizing runs on reserves, Reuters reported. She told lawmakers that both EU and foreign
issuers should face equal requirements.
Stablecoin Risks Under EU Rules
The EU’s Markets in Crypto-Assets Regulation (MiCAR)
requires stablecoins to be fully backed. Lagarde said the framework leaves room
for risk if non-EU firms operate under looser rules. She urged lawmakers to
demand equivalence regimes from foreign jurisdictions.
“European legislation should ensure that such schemes
cannot operate in the EU unless supported by robust equivalence regimes in
other jurisdictions and safeguards relating to the transfer of assets between
the EU and non-EU entities,” she said.
Lagarde warned that holders may choose to redeem in
the EU, where MiCAR bans fees and imposes stricter safeguards. That could
concentrate pressure on reserves based in the bloc.
“In the event of a run, investors would naturally
prefer to redeem in the jurisdiction with the strongest safeguards, which is
likely to be the EU,” she said. “But the reserves held in the EU may not be
sufficient to meet such concentrated demand.”
International Cooperation Needed
Lagarde added that without global standards, risks
will shift to weakly regulated markets. “Without a level global playing field,
risks will always seek the path of least resistance,” she said.
Federico Cornelli, a commissioner at Italy’s market
watchdog CONSOB, said EU rules must also reinforce that cryptocurrencies are
not legal tender. “Only the euro issued by our ECB is legal tender, and this
must be made very clear to all citizens,” he said.
The ECB, as chief banking supervisor and lender of
last resort in the eurozone, has placed stablecoin oversight at the center of
its stability mandate.
This article was written by Jared Kirui at www.financemagnates.com.
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