Lagarde draws a hard line: euro stablecoins are a financial stability threat, not a strategic asset!

ECB President Christine Lagarde used a speech at the Banco de España LatAm Economic Forum on Friday to make her most direct case yet against euro-denominated stablecoins, arguing the risks to financial stability and monetary-policy transmission outweigh any benefit to the euro's global standing. "The case for promoting euro-denominated stablecoins is far weaker than it appears," she said.

The specific risks she cited include bank runs and de-pegging events — referencing the 2023 SVB-Circle episode — deposit substitution that narrows Europe's bank-dependent lending channel, and broader monetary fragmentation. An ECB working paper from March underpins her position, warning that widespread stablecoin adoption would threaten euro-area banks and the ECB's monetary sovereignty.

The speech puts Lagarde directly at odds with Bundesbank President Joachim Nagel, who publicly backed euro…