Lagarde Says Stablecoins Will Not Strengthen Euro’s Global Role
Lagarde pointed to the 2023 collapse of Silicon Valley Bank, when Circles USDC stablecoin briefly fell below its peg after revealing exposure to the bank, as an example of how quickly confidence can weaken. She said such episodes show how redemption pressures can spill into underlying asset markets and, as stablecoin use grows, create feedback loops between redemptions and prices, particularly where issuers are not banks. Technology function: Stablecoins are not the only solution On the technology side, Lagarde acknowledged the role of stablecoins in cross-jurisdictional financial market infrastructure that is accessible “without relying on a maze of legacy intermediaries.” However, she said that this technological function is not unique to stablecoins. Other forms of tokenized money, including commercial bank deposits or central bank money, could perform the same role within distributed ledger systems, Lagarde said. “The answer […] does not lie in rejecting technology or discouraging stablecoins altogether. Instead, we must build the public infrastructure that will enable alternative instruments, such as stablecoins and other forms of tokenised money, to operate within a framework anchored by central bank money.” Lagarde said the EU response is to facilitate wholesale settlement in central bank money through its Pontes project, which links distributed ledger platforms to the Eurosystems