The European Central Bank (ECB) is preparing for a revolutionary step — issuing a digital euro directly on the blockchain. This statement, made by Executive Board member Isabel Schnabel, signals a tectonic shift in the regulator's approach to digital assets and calls into question the future of stablecoins in Europe.
Why the ECB rejects stablecoins
The key issue, according to Schnabel, lies not in the reliability of stablecoins per se, but in their inability to withstand systemic crises. In moments of panic, when everyone simultaneously seeks to convert assets into cash, only the central bank can promptly expand issuance. A stablecoin issuer, unlike a regulator, does not possess such capabilities.
Schnabel cited a historical example — the banking crisis of 1907, when the money supply was rigidly tied to government bonds and could not be expanded. This problem was only solved with the creation of the Federal Reserve System in 1913. Stablecoins, in essence, reproduce this vulnerability, making them not a replacement, but merely a supplement to fiat money.
Statistics that explain the urgency
The market situation is telling: the volume of dollar stablecoins in circulation is about $304 billion, while euro-pegged tokens barely reach $1 billion. If settlements shift to private tokens, Europe would effectively be conducting transactions in dollars. This is an existential challenge to the region's financial sovereignty.
Project Pontes: a bridge to the future
Next month, Project Pontes will launch, connecting the TARGET Services infrastructure — the eurozone's core settlement system — with market blockchain platforms. The technology has already been tested: from May to November 2024, 64 organizations from nine countries ran 58 scenarios, processing settlements of nearly €1.6 billion in central bank money.
Schnabel considers three possible paths: direct issuance of tokens, creating a bridge between systems, or tokenization through a private company's omnibus account. She advocates for the first option, which would allow the ECB to retain control and the ability to launch repo operations via code.
Analyst's perspective
The ECB's initiative is not just a technological experiment, but a strategic response to the dominance of dollar stablecoins. The example of the French company Lise, which received the first EU license for a tokenized exchange, is telling — tokenization opens financial markets to small businesses. However, in my view, the success of the digital euro will depend not only on technology, but also on the market's willingness to accept government tokens as a full-fledged alternative to decentralized solutions. A regulator that becomes an issuer itself risks facing a dilemma: control versus innovation.