The European Central Bank (ECB) may be forced to view StableCoins not only as a regulatory concern, but also as a potential source of macroeconomic shocks, according to Dutch Central Bank Governor Olaf Sleijpen.
In an interview with Finance, Sleijpen warned that fast growing dollar stablecoins can become systemically linked to the European financial ecosystem. He said that if the tokens were to be secured, they could affect financial stability, the wider economy and even inflation.
“If StableCoins are not stable, you can end up in a situation where the underlying assets have to be sold quickly,” he said, stressing that rapid liquidation could increase stress on the markets.
Sleijpen said the ECB could be forced to “rethink monetary policy” if the shocks are strong enough. However, he emphasized that it is unclear whether such a scenario would require rate increases or cuts.
The StableCoin market cap could reach $2 trillion by 2028
Sleijpen’s comments come during a year of explosive growth for the StableCoin sector. Coingecko data out A nearly 50% increase in the StableCoin market cap this year. At the time of writing, StableCoins has an overall valuation of $310 billion.
Tether’s USDT (USDT), the leading US dollar-pegged stablecoin on the market, grow up From a $127 billion market cap in November 2024 to a $183 billion market cap last year, marking a 44% increase.
USDC (USDC), the second largest StableCoin asset, grew nearly 100% from $37 billion to $74 billion in the same time.
In April, the US Treasury Department reported that emerging market dynamics have the potential to accelerate the growth of Stablecoins. The Treasury predicts that StableCoins A $2 trillion market cap could be reached by 2028.
Sleijpen said that as dollar-denominated stablecoins continue to grow, the sector may reach a scale where their volatility is directly important to the European economic outlook.
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European dollar-backed dollar concerns
In April, ECB Executive Board member Piero Cipollone Write an article highlighting the concerns About the growth of dollar backed stableCoins.
He argued that the launch of a Central Bank Digital Currency (CBDC) It may help maintain fiscal sovereignty in the eurozone. He said a digital euro could limit the potential for foreign stablecoins to become a more common medium of exchange in Europe.
The Minister of Economy and Finance of Italy, Giancarlo Giorgetti, also Concerns expressed over US Dollar StableCoins. In April, Giorgetti said that StableCoins pose a more significant threat to European financial stability than trade tariffs.
While the concerns with StableCoins are obvious, Sleijpen’s comments highlight a more pressing concern: that StableCoin issuers could become vectors for financial instability. If large issues of reserves outside the reserve, a contagion can be extended to liquidity conditions, asset prices and inflation.
In September, Nobel Prize-winning economist Jean Tirole warned that governments could face multibillion-dollar pressures if major stablecoins were to unravel.
https://www.youtube.com/watch?v=ziirhv3cbog
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