Europe is moving deeper into the digital payments era, but a senior Bank of France official has warned that the rise of stablecoins could weaken the region’s monetary control if policymakers do not respond carefully.
In speaking points published by the Bank for International Settlements on Thursday, Denis Beau, First Deputy Governor of the Bank of France, said widespread use of stablecoins in payments could lead to “stablecoinisation” and even “dollarisation” of part of Europe’s payment system.
Beau gave the remarks at a EUROFI seminar in Nicosia on 26 March. He pointed out that the issue is important because stablecoins currently in use are mainly linked to the U.S. dollar and are mostly managed by non-European entities.
He believes this poses risks not just for financial stability, but also for Europe’s control over the flow of money within its own economy.
Europe fears dependence on foreign digital money
The warning highlights the potential consequences if stablecoins become a key method for paying in everyday transactions.
Beau argued that if Europe allows foreign-currency stablecoins to spread too much, the region could become more reliant on payment tools tied to outside issuers and foreign currencies.
He said Europe should continue using its current payment system, where central bank money and money from regulated banks work together.
He added that Europe needs safe and efficient payment methods that can work across the region and support both traditional finance and tokenized finance.
“On the second point, I strongly believe that tokenisation should develop, for its payment and settlement asset pilar, on the solid foundation of our current two-tier monetary system,” he added.
At the same time, Beau noted that alternatives are starting to appear. European financial services providers are developing euro-denominated stablecoins, tokenized bank deposits, and other digital settlement tools.
He said these efforts could help Europe avoid becoming too reliant on dollar-based products.
Beau said Europe should pursue three goals at once. First, the Eurosystem should adjust central bank money services to support digital payments and tokenized finance.
Second, European institutions should back the development of tokenized private money. Third, regulators should continue improving the legal framework around these products.
He also pointed to projects backed by the Banque de France, including Pontes, Appia, and the digital euro.
According to him, the Bank of France plans to deploy wholesale central bank money services in tokenised form by the end of 2026. Beau described the digital euro as a critical part of the retail response, though not the only one.
Bank of France wants tougher stablecoin rules
Beau said the European Union’s Markets in Crypto-Assets regulation, known as MiCA, is an important step because it created the world’s first broad crypto rulebook.
But he also made it clear that MiCA does not fully solve the risks that could come from wider stablecoin use, especially when the issuers are based outside Europe. He said Europe may need stricter rules to stop foreign currency-backed stablecoins from becoming common in everyday payments.
He also said MiCA should apply stricter rules to the same stablecoin being issued both inside and outside the EU, because that could create room for regulatory arbitrage during times of stress.
“MiCA would also benefit from a much stricter regulation of the multiissuance of the same stablecoin within and outside the EU, to reduce regulatory arbitrage risks in times of stress,” he added.
Beau also drew a clear line between banks and non-bank stablecoin issuers. He said banks benefit from direct access to central bank liquidity and European supervision, which can make them more resilient during periods of financial stress.
Non-bank issuers do not currently meet the Eurosystem’s eligibility rules for access to central bank accounts. Still, he noted that such access could be considered in the future, particularly for non-bank stablecoin issuers.
At the global level, Beau said countries should fully and quickly apply the Financial Stability Board’s standards for crypto-assets. He said regulators should follow the principle of “same activities, same risks, same rules” and stay technology-neutral.
This week, the Bank of Korea and the Bank of France also held a joint seminar on digital assets and climate risks. The event looked at how stablecoins and central bank digital currencies could affect the future of payment systems.