ECB officials warn: Systemic risks of stablecoins cannot be ignored, once faced with a run or forced to shift interest rate policy

As the market size of stablecoins pegged to the US dollar expands dramatically, a senior decision-maker at the European Central Bank (ECB) has warned that a run on this market could trigger shockwaves that may force central banks to reconsider their interest rate paths. According to a report by the Financial Times on November 17, Olaf Sleijpen, the President of the Dutch Central Bank and a member of the ECB's Governing Council, issued this warning in an interview. He pointed out that these digital tokens pegged to fiat currencies like the US dollar will, at some point, become "systemically important." The concern arises against the backdrop of a 48% surge in the volume of stablecoins this year, exceeding $300 billion, following new regulations issued by US President Trump that paved the way for the private sector to issue stablecoins. Many of these stablecoins are backed by assets such as US Treasury bonds. Sleijpen stated that if stablecoins are "not stable enough," it could lead to panic selling of their underlying assets. He warned that this would not only threaten financial stability but could also impact the broader economy and inflation, potentially forcing the ECB to take action. Sleijpen's warning reflects a general concern among ECB officials regarding the rise of stablecoins. He explained that rapid selling of underlying assets could first impact financial stability, subsequently affecting the real economy and inflation. In this scenario, the ECB "may have to rethink monetary policy," although he added that the direction of any policy adjustment (whether to cut or raise rates) remains uncertain and that financial stability tools should be used first. Current Interest Rate Position Remains Unchanged Despite issuing warnings about future risks, Sleijpen holds a relatively optimistic view of the current monetary policy. He believes that conditions in the Eurozone have "improved slightly" since June, with reduced trade uncertainties, better-than-expected economic growth, and inflation generally aligning with the mid-term target of 2%. Therefore, he stated that there is "no reason" to adjust interest rates based on the current information. Regarding inflation risks, he considers the situation to be "balanced," which contrasts with the hawkish view of ECB Executive Board member Isabel Schnabel, who believes the risks are "slightly tilted to the upside." According to LSEG data, investors currently estimate only a 25% chance of a 25 basis point rate cut by the end of next year