European Central Bank (ECB) board member Benoit Coeure has warned that global stablecoins remain untested and raise potential risks across multiple policy domains.
Coeure, a member of the ECB’s Executive Board, made his remarks at the Joint Conference of the ECB and National Bank of Belgium on Nov. 26, in a speech entitled “Crossing the chasm to the retail payments of tomorrow.”
Global stablecoins pose broad policy risks
Coeure’s speech was focused on the failure to establish a pan-European, market-led solution for digital retail payments.
Notwithstanding progress with back-end initiatives like SEPA and the TARGET Instant Payment Settlement (TIPS) system, no pan-European solution has made equivalent progress in point-of-sale and online payments, he said.
The EU is thus “at risk of losing its economic edge,” with national fragmentation paralyzing competition and stifling innovation on the pan-European level, in his view.
Twenty years after the introduction of the euro, this failure to harmonize cross-border payments services has spurred consumer interest in faster and cheaper alternatives and new ecosystems. Here he warned against the potential risks of Europe’s reliance on new global initiatives:
“Global stablecoin arrangements […] raise potential risks across a broad range of policy domains, such as legal certainty, investor protection, financial stability and compliance with anti-money laundering requirements. Public authorities have made clear that the bar will be set very high for these stablecoin initiatives to be allowed to operate.”
Couere continued to underscore that dependence on non-European global players generates a strategic risk to the “autonomy and resilience of European payments systems.”
Central banks should not stifle private sector
Coeure further noted that central banks will need to adapt their policies and instruments to respond to new consumer protection and monetary policy transmission challenges as emerging technologies reshape consumer payment behavior.
He noted that the ECB is investigating whether central bank digital currencies could ensure that citizens “remain able to use central bank money even if cash is eventually no longer used,” but noted the need to remain mindful of their broader impact on financial intermediation.
Potential central bank-led initiatives, however, should not crowd out private-sector players seeking to develop fast and efficient retail payments in the euro area, Coeure stressed.
As CryptoX reported, Couere has consistently taken a circumspect line regarding global stablecoin payments systems, the discussion of which has intensified since Facebook unveiled its Libra project.
Libra has received a frosty response from multiple European lawmakers, including French finance minister Bruno Le Maire, who has warned that Libra should not be authorized on European soil as it would imperil the monetary sovereignty of states.
