Stablecoins Pose Potential Macroeconomic Risks, Warns Dutch Central Bank Governor

According to Cointelegraph, the European Central Bank (ECB) may soon need to consider stablecoins as more than just a regulatory issue, viewing them as potential sources of macroeconomic shocks. This perspective was shared by Olaf Sleijpen, the governor of the Dutch central bank, in a recent interview. Sleijpen highlighted the rapid growth of dollar-pegged stablecoins, suggesting they could become systemically significant within Europe's financial ecosystem. He warned that if these tokens were to destabilize, they could impact financial stability, the broader economy, and even inflation. Sleijpen emphasized that if stablecoins prove unstable, the swift sale of underlying assets could exacerbate market stress. He noted that the ECB might need to reconsider its monetary policy in response to significant shocks, though it remains uncertain whether this would necessitate rate hikes or cuts. The stablecoin sector has experienced substantial growth, with CoinGecko data indicating a nearly 50% increase in market capitalization this year, reaching a valuation of $310 billion. Tether’s USDt (USDT), the leading US dollar-pegged stablecoin, saw its market cap rise from $127 billion in November 2024 to $183 billion, marking a 44% increase. Similarly, USDC (USDC), the second-largest stablecoin, doubled its market cap from $37 billion to $74 billion. In April, the US Department of the Treasury reported that evolving market dynamics could accelerate stablecoin growth, projecting a potential market cap of $2 trillion by 2028. Sleijpen noted that as dollar-pegged stablecoins expand, their fluctuations could significantly influence Europe’s economic outlook. Concerns over dollar-backed stablecoins in Europe have been echoed by other officials. In April, ECB Executive Board member Piero Cipollone expressed worries about their growth, advocating for a central bank digital currency (CBDC) to maintain monetary sovereignty in the eurozone. Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, also voiced concerns, suggesting that stablecoins pose a greater threat to European financial stability than trade tariffs. While these concerns are evident, Sleijpen's remarks underscore a more immediate issue: the potential for stablecoin issuers to become sources of financial instability. If large issuers were to offload reserves on a large scale, it could lead to contagion affecting liquidity conditions, asset prices, and inflation. In September, Nobel Prize-winning economist Jean Tirole warned that governments might face significant bailout pressures if major stablecoins were to collapse.