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Run on stablecoins could force ECB to rethink interest rates, warns top policymaker

ft.com · 397 words · saved by 1 readers

The European Central Bank could be forced to adjust monetary policy if a run on stablecoins were to send shockwaves through the economy, a top ECB policymaker told the Financial Times. “If stablecoins in the US increase at the same pace as they have been increasing . . . they will become systemically relevant at a certain point,” Dutch central bank governor Olaf Sleijpen said in an interview, adding the digital tokens could create risks for financial stability, the economy and inflation in Europe that would potentially force the ECB’s hand. This year, the volume of digital tokens that track currencies such as the US dollar has shot up by 48 per cent to more than $300bn as US President Donald Trump enacted new rules paving the way for stablecoins to be issued by the private sector. Many are backed by US Treasuries as underlying assets. “If stablecoins are not that stable, you could end up in a situation where the underlying assets need to be sold quickly,” said Sleijpen, who is one of t

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