ECB’s Stablecoin Dilemma: Can Europe Defend Monetary Sovereignty Without Losing the Digital Payments Race

In this paper, we discuss:

• How the ECB’s resistance to relaxing MiCAR rules aims to protect commercial bank funding and monetary policy transmission from large-scale stablecoin adoption; 
• Why restricting euro-denominated stablecoins creates a paradox that could inadvertently accelerate the digital dollarisation of European payments; 
• How the overwhelming dominance of USD-pegged stablecoins poses a major competitive and geopolitical challenge to Europe’s digital financial sovereignty; 
• Why public initiatives like the digital euro and the Appia roadmap risk arriving too late to counter rapidly scaling private tokenised innovations; 
• How a potential middle path of public-private cooperation and regulated euro-backed stablecoins could balance financial stability with payment innovation.

Download PDF: Stablecoin Dilemma – July 2026