ECB Official Warns Stablecoin Growth Threatens Financial Stability

A senior European Central Bank (ECB) official has issued a warning about the potential risks associated with stablecoins, comparing them to money market funds that were destabilized in the past.

Isabel Schnabel, Member of the Executive Board of the ECB, made the remarks at the 2026 Bank of Korea International Conference in Seoul on June 1. She drew a parallel between stablecoins and money market funds, noting that both invest in short-term safe assets and promise redemption at or near par.

According to Schnabel, this resemblance is the problem, as it can lead to runs and fire sales, which were seen during the 2008 financial crisis when the Reserve Primary Fund fell below par and froze short-term funding markets.

The global stablecoin market has reached $300 billion, with Tether and USDC accounting for approximately 90% of it. Euro-denominated tokens remain marginal at around €500 million combined, while close to 85% of stablecoin transaction volume still sits inside crypto trading.

Schnabel's larger concern is strategic: the dominance of dollar-denominated stablecoins could deepen the dollar's influence and erode the euro's standing in tokenized finance. The ECB's response is to advance its digital euro and wholesale CBDC projects, which include Pontes and Appia.