European Central Bank Executive Board member Isabel Schnabel said the best response to the risks posed by stablecoins is to ensure that public money remains the anchor of the financial system, pointing to the digital euro and tokenized central-bank money as the ECB's strategy. Speaking at a Bank of Korea conference in Seoul on Monday, Schnabel warned that while stablecoins offer significant benefits, they could also increase the risk of runs in times of stress, weaken the transmission of interest-rate decisions and cement the international dominance of the dollar.

The German official said "many of the advantages of stablecoins arise from the technology on which they are based rather than from the characteristics of the instrument itself," and questioned whether stablecoins would find their place in the financial system as money market funds did 50 years ago or whether tokenized deposits would prove more promising. Her remarks came a day after Federal Reserve Governor Christopher Waller said the spread of stablecoins could broaden the reach of US monetary policy and dismissed CBDCs as a "stupid thing."