France's central bank advocates for euro stablecoin dominance
Denis Beau, First Deputy Governor of the Bank of France, emphasized the need for Europe to secure its payment system against the "dollarisation" of stablecoins. He called for a triple objective: adapting central bank money services, supporting private euro stablecoins, and strengthening regulation.
Countering dollarisation risks
Mr. Beau highlighted the current dominance of USD-denominated stablecoins, largely controlled by non-EU players, as a strategic challenge for Europe.
He stressed the importance of preserving the foundations of the existing two-tier monetary system, which relies on the coexistence of public central bank money and regulated private money.
The diffusion of stablecoins as settlement assets could lead to a "stablecoinisation" and "dollarisation" of a significant part of the European payment system, posing risks to financial and monetary stability, as well as strategic autonomy.
Alternatives are emerging, however, with EU-based financial service providers offering euro stablecoins and tokenized forms of traditional, safer settlement assets like bank deposits and central bank money.
Banque de France's digital initiatives
In response to the stablecoin emergence, Beau outlined a triple objective for European players: adapting central bank money services for wholesale and retail digital payments, supporting the development of tokenized private money by European financial institutions, and designing an adequate regulatory framework.
The Banque de France is actively contributing to this agenda, with projects like Pontes and Appia, and the digital euro.
The institution plans to deploy its wholesale services in tokenized central bank money by the end of 2026.
This commitment extends to supporting initiatives from European financial intermediaries, such as the European Payments Initiative (EPI) consortium, and efforts to develop euro-denominated tokenized deposits and stablecoins for cross-border transactions.
MiCA needs sharper teeth
While MiCA represents a crucial first step, it only partially addresses the systemic risks posed by widespread adoption of non-European stablecoins.
A stronger framework is essential to restrict foreign currency-backed stablecoins for everyday payments and to prevent regulatory arbitrage through multi-issuance.
Clarifying e-money token rules in upcoming revisions will be vital for future stability.