ECB Wants the Euro Directly on Blockchain. Will It Kill Stablecoins in Europe?
The European Central Bank (ECB) wants to issue euros directly onto a blockchain. Executive Board member Isabel Schnabel made that case at the Jackson Hole symposium on Friday, and she was very clear about stablecoins.
She is talking about money that banks use to settle with each other, not the euros in your account. Tokenized markets, she argued, need an asset only a central bank can create.
Why Schnabel Rejects Stablecoins as Settlement Money
A stablecoin can be built to be almost perfectly safe, and Schnabel accepts that. Her objection is about what happens next.
In a panic, everyone wants cash at once. A central bank can create more of it. A stablecoin issuer cannot.
Her precedent is the banking panic of 1907. Money was tied to banks' holdings of government bonds, so the money supply could not expand. The Federal Reserve Act of 1913 fixed that.
"Stablecoins are best understood as complements to central bank money, not substitutes for it," read an excerpt in her speech.
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