Head of the European Stability Mechanism: Stablecoins will threaten financial stability if they lack proper guarantees and management

According to a Bloomberg report on October 16th, a senior EU policymaker stated that stablecoins, if lacking proper guarantees and regulation, could threaten financial stability. Pierre Gramegna, President of the European Stability Mechanism (ESM), stated in Washington on Wednesday that if stablecoins become mainstream and lack the same guarantees as central bank currencies, they would pose risks to the global financial system. He emphasized that he is not opposed to stablecoins, but that they must operate within a framework that protects the safety of consumers and financial participants. Furthermore, while Austrian Central Bank President Martin Kocher believes that stablecoins will not be as popular in the eurozone as in other regions, Gramegna emphasized that the EU cannot be marginalized in the cryptocurrency space. Since 99% of stablecoins are denominated in US dollars, Europe would miss out if it does not launch a euro-denominated stablecoin. He also believes that cash, digital currencies, and stablecoins can coexist.