European policymakers are sounding alarms over the rapid rise of stablecoins. Dutch central bank Governor Olaf Sleijpen told the Financial Times that if dollar-pegged stablecoins falter, issuers may be forced to liquidate reserves. This could have a cascading effect, causing stress across the global financial system. He warned that a sudden run could destabilize markets and force the European Central Bank (ECB) to reconsider its interest rate strategy.
Sleijpen cautioned that the rapid expansion of dollar-backed stablecoins could make them integral to Europe’s financial system. But he warned that if these assets were to lose stability, the fallout could ripple through financial markets, the broader economy, and even inflation.
He noted that severe turbulence in the stablecoin market could compel the ECB to reassess its monetary policy approach. He didnt divulge details on whether such a situation would call for raising interest rates or lowering them.
Stablecoin growth in the EEA
The European Economic Area (EEA) has witnessed explosive growth in stablecoins. Market capitalization surged nearly 50% in 2025, with Tether (USDT) and USDC doubling their footprint across exchanges. Analysts project the stablecoin market could reach $2 trillion globally by 2028. The ECB traditionally adjusts interest rates to manage inflation and growth. After years of ultra-low rates, the bank shifted to tightening during the recent inflationary cycle.
When growth slowed, the central bank signaled potential rate cuts in order to spur the economy. Policymakers now warn that a destabilizing run on stablecoins could force abrupt changes. The bank would with be forced to hike rates to contain inflation or cut rates to stabalize liquidity.
Back in September a Bank of Italy representative had urged for more clarity on rules for multi-issuance of stablecoins, as the European Commission and the European Central Bank had difference in opinion on how they would be trade by EU and non-EU issuers. ECB’s Christine Lagarde, has also expressed her concerns on stablecoins issued by foreign entities, leaving room for errors.