The European Central Bank issued a fresh ECB stablecoin warning on Monday. It said rapid token growth could pressure banks and raise run risks. The central bank also linked wider adoption to deeper global reliance on the U.S. dollar system.
According to an official statement, ECB Executive Board Member Isabel Schnabel made the remarks in Seoul. She spoke at the 2026 Bank of Korea International Conference. The event took place on 1 June 2026.
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ECB Stablecoin Warning Highlights Bank Funding Risks
According to the ECB, stablecoins are now more similar to previous private money forms. Schnabel likened their growth to money market funds. She said these products can be beneficial and need more public oversight now.
The ECB stablecoin warning was the first to address financial stability. Stablecoins are private digital tokens usually pegged to fiat currencies. They might hold government securities, deposits at banks, cash, or other assets.
The global stablecoin market is close to $300 billion, and crypto trading remains their primary use case, Schnabel said. That market is dominated by dollar-backed tokens. Stablecoins Tether and USD Coin make up approximately 90% of the total stablecoin value.
Bank funding risks were also a part of the ECB stablecoin warning. Customers can transfer deposits from banks to stablecoins, Schnabel said. Such a change would make that funding source less strong for traditional lenders.
This would allow banks to depend more on wholesale markets. This could increase the concentration of liabilities and their rate-sensitivity, Schnabel said. It might also render funding more sensitive when markets get stressed.
She likened the risk to that of money market fund growth. Stablecoins can offer another avenue for bank disintermediation. This risk applies even on the assumption that major stablecoins do not directly pay interest.
Dollar-Backed Stablecoins Add Dollarization Risk
The ECB stablecoin warning included the risk of sudden redemptions. Stablecoins are still vulnerable to runs,” Schnabel said. She connected that risk to stress observed in 2008 and throughout the COVID-19 market turmoil.
Her comments focused on the importance of reserve quality. During periods of heightened stress, issuers can expect to see mass redemption requests if their investors lose confidence. Forced asset sales could then spread pressure into wider financial markets.
Schnabel pointed to Tether’s exposure to commodities, loans, and cryptos. She also said that USDC reserves could impact government bond markets in distress. The ECB stablecoin warning said round-the-clock settlement may speed up contagion.
The second part of the address concerned the currency. The majority of stablecoins are pegged to the USD. Schnabel noted that adoption may provide by default a structural dollarization.
The ECB stablecoin warning did not call for rejecting innovation. Central banks need to modernize the public financial infrastructure, said Schnabel. She cited blockchain payments, tokenization, and instant settlement as developments that could be beneficial.
The ECB is promoting the digital euro for retail payments. It’s also developing tokenized central bank money for the wholesale money market. These projects can secure the public’s access to central bank money and maintain monetary control, said Schnabel.
A digital euro could minimize reliance on foreign payment providers. It could also help Europe to become more financially sovereign. The ECB stablecoin warning was about public money modernization in response to private digital tokens.
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