ECB Rebuffs Euro Stablecoin Support at Nicosia Meeting, Cites Deposit Flight Risk

European Central Bank officials and finance ministers rejected proposals from Brussels think tank Bruegel to actively support euro stablecoins, according to sources cited by Reuters following an informal meeting in Nicosia last week. The Bruegel paper, presented by authors Lucrezia Reichlin, Bo Sangers, and Jeromin Zettelmeyer, argued that inaction risks ceding on-chain settlement to dollar stablecoins, which could leverage network effects to dominate trading environments despite MiCA’s monetary sovereignty protections for consumer use. The ECB resisted on three grounds: concern that euro stablecoins would make bank deposits more volatile, unwillingness to act as lender of last resort to stablecoin issuers, and a belief that the monetary sovereignty threat is overstated.

The pushback is notable because Bruegel floated a spectrum of interventions rather than a single policy prescription. The core framing was that euro stablecoin issuance remains too small and that continued regulatory friction may prevent the critical mass needed to compete with dollar tokens in crypto and securities trading, a domain where MiCA’s safeguards do not apply. The question now is whether the ECB’s stance, anchored in deposit stability and central bank remit, leaves a structural opening for dollar dominance in tokenised capital markets infrastructure, or whether the sovereignty risk was indeed overstated and market forces will sort the question without official intervention.