ECB President Lagarde Calls For Firm Safeguards on Foreign Stablecoins

European Central Bank President Christine Lagarde has pressed EU lawmakers to enforce strict regulatory standards on foreign stablecoins before they operate within the bloc. Speaking at a European Systemic Risk Board conference in Frankfurt, Lagarde highlighted the risks of liquidity mismanagement and investor arbitrage if stablecoins are not held to the same safeguards as traditional financial instruments.

"The risk of liquidity mismanagement across jurisdictions is one we have seen before," Lagarde said, drawing parallels to banking regulations. She pointed to the Markets in Crypto-Assets (MiCA) framework, which prohibits redemption fees, as a potential vulnerability during stablecoin runs—investors could flock to jurisdictions with stronger protections, draining local reserves.

Stablecoins, which peg their value to fiat currencies, remain a focal point for global regulators in 2025. Lagarde's remarks underscore the ECB's push for cross-border financial stability and its cautious approach to crypto innovation.