Dutch Central Bank Governor Warns Stablecoins Could Disrupt ECB Policy

The European crypto industry is facing challenges as the region prepares to adopt cryptocurrencies and tokens. A senior official at the European Central Bank (ECB) has warned that the rapid expansion of the U.S. dollar-pegged stablecoins could change the market. He has warned that the stablecoins could force the institutions to treat the sector as a regulatory challenge as well as a potential source of macroeconomic instability.

Olaf Sleijpen, the Dutch central bank governor, stated that the ECB may eventually need to reassess its monetary policy framework if the stablecoins shock the financial markets.

Potential Impact on ECB Monetary Policy

In an interview with the Financial Times, Sleijpen warned that the booming stablecoin market is approaching a scale where any abrupt destabilization could have real economic consequences. He said, “If stablecoins are not that stable, you could end up in a situation where the underlying assets need to be sold quickly.”

He also warned that the mass liquidation of reserve assets could intensify market conditions and disrupt liquidity. In the worst-case scenario, the fallout could influence financial stability with broader inflation. Sleijpen also suggested that such a shock might force the ECB to “rethink monetary policy.” He also stressed that it is too early to determine whether the impact would require a tightening or a loosening of interest rates.

The comments underscore the growing concern among European policymakers as stablecoins become increasingly integrated into global financial flows.

Market Growth

This warning comes during a year of incredible expansion in the stablecoin market. According to the data taken from CoinGecko, the sector’s overall market capitalization has surged nearly 50% this year to $310 billion. Tether’s USDT, the world’s largest stablecoin, climbed from $127 billion in November 2024 to $183 billion, which is an increase of 44%. The second-largest stablecoin, USDC, doubled from $37 billion to $74 billion over the same period. The U.S. Treasury report released in April projected that the evolving market dynamics could push the global stablecoin market to $2 trillion by 2028.

However, the European officials have increasingly voiced their concerns that dollar-pegged tokens can potentially decrease the eurozone’s monetary sovereignty. In April, the ECB Executive Board member Piero Cipollone argued that a digital euro could help prevent foreign-currency stablecoins from becoming widely used in Europe. Italy’s Finance Minister Giancarlo Giorgetti went one step further and labeled the U.S. dollar stablecoin as a great threat to European financial stability.