ECB: Growing stablecoin use threatens eurozone's monetary control

The European Central Bank (ECB) has warned that the growing use of stablecoins could undermine the eurozone's monetary sovereignty by weakening its control over monetary policy and disrupting the intermediary role of banks, Bloomberg reported. In a recent report, the ECB stated that a widespread shift of household deposits to cryptocurrencies could impair the banking sector. The central bank added that this impact would be significantly amplified if non-euro-denominated stablecoins come to dominate the market. The ECB also projected that increased stablecoin adoption could create uncertainty in the transmission of policy interest rates to lending. To protect monetary sovereignty, European authorities and the financial sector are now promoting the development of euro-based stablecoins and establishing relevant regulations, the report added.