Jul 12, 2022 05:00AM ET
By: AnalysisWatch
The European Central Bank stressed that the new rules should be implemented "urgently."
The EU central issuer also acknowledged that the financial risks associated with stablecoins are currently "limited".
The European Central Bank has demanded that stablecoins be subject to stricter regulatory oversight as soon as possible before they become a real financial risk to the stability of European countries.
The speed and cost of stablecoin transactions, as well as the conditions for their redemption, do not meet the requirements of practical means of payment for the real economy, according to the paper, entitled "The role of stablecoins in cryptocurrencies and beyond: functions, risks, and policy."
For the ECB, it is essential that stablecoins are effectively regulated by all EU member states, with the common goal of developing "responsible innovation" and ensuring "financial stability".
This "appropriate regulation, supervision, and oversight" must take place "before stablecoins become a risk to financial stability and the smooth functioning of payment systems," the bank stresses.
In recent months, the ECB has stepped up its pressure campaign in an effort to speed up the implementation of cryptoasset regulations in the eurozone.
ECB President Christine Lagarde, meanwhile, has taken every opportunity to discredit the value of cryptocurrencies.
Although the ECB acknowledges that stablecoins represent "only a small part of the total cryptoasset market," it stresses that "the largest of them have taken on a critical role in the cryptoasset ecosystem."
The body responsible for monitoring and making recommendations for the future operations of the global financial system stresses that "cryptoassets and markets must be subject to effective regulation and oversight commensurate with the risks they pose, both domestically and internationally."