Summary
- The European Central Bank (ECB) warned that stablecoins could erode the deposit base of eurozone banks and pose a risk to global financial stability.
- The report pointed out that the rapid growth of stablecoins could cause structural risks to the banking sector, such as the outflow of retail deposits.
- The ECB mentioned that large-scale redemptions of stablecoins could impair the functioning of the US Treasury market and potentially lead to a financial crisis, stressing the need for strong regulation.
The European Central Bank (ECB) has again raised a warning that stablecoins could erode the deposit base of eurozone banks and harm global financial stability.
On the 24th (local time), according to cryptoasset specialist media CoinDesk, the ECB pointed out in a research report that "the rapid growth of stablecoins could create a structural risk of retail deposits leaving the banking sector." According to the outlet, stablecoins' market capitalization currently exceeds $28 billion, accounting for about 8% of the total cryptoasset market.
The ECB said, "The largest stablecoin issuers, Tether and Circle, hold substantial amounts of US Treasury securities," and "if large-scale redemptions (run) occur, the sale of reserve assets would be inevitable, which could undermine the functioning of the US Treasury market and lead to a financial crisis."
The report went on to say, "Stablecoins could destabilize banks' funding structures," and emphasized the need for regulation.
Minseung Kang
minriver@bloomingbit.ioBlockchain journalist | Writer of Trade Now & Altcoin Now, must-read content for investors.
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