In a Euro50 Group meeting presentation on stablecoins and monetary sovereignty, European Central Bank Executive Board member Piero Cipollone set out the ECB’s approach to developing a European market for digital assets while keeping central bank money as the risk-free settlement anchor alongside private settlement assets. The update linked this to the digital euro for retail payments and to work on central bank money for wholesale transactions on distributed ledger technology platforms to reduce risk, enable scale and avoid fragmentation. The ECB noted that stablecoins are still used mainly within the crypto-asset ecosystem, with activity concentrated in decentralised finance protocol liquidity at 46.5% and centralised exchange liquidity at 39%, while cross-border transfers account for 2.6% and payments and treasury for 0.3%. It highlighted financial stability risks from deviations from parity, runs, fire-sale dynamics in reserve markets, spillovers to banks hosting reserve funds and regulatory arbitrage, alongside monetary policy transmission risks from more volatile bank funding and deposit outflows, including into foreign currency-denominated stablecoins. Major USD stablecoin issuers were described as holding significant traditional financial assets, with reserves consisting predominantly of US Treasuries, reverse repos, shares in money market funds, cash and bank deposits. For wholesale settlement, the short-term Pontes track aims to link distributed ledger technology platforms and TARGET services by the end of the third quarter of 2026, while the long-term Appia track is intended to shape an integrated future settlement ecosystem. The ECB also flagged tokenised central bank money as a bridge across siloed networks to support interoperability and potential exploration of cross-border settlement using both public and private tokenised settlement assets.
European Central Bank 2025-10-18
European Central Bank outlines digital euro and Pontes DLT settlement roadmap to keep central bank money as the anchor amid stablecoin growth
ECB Executive Board member Piero Cipollone outlined the strategy for developing a European digital asset market, emphasizing central bank money as a risk-free settlement anchor. The ECB highlighted stablecoins' predominant use within the crypto ecosystem and associated financial stability risks, including deviations from parity and regulatory arbitrage. For wholesale settlement, the ECB plans to link distributed ledger technology platforms with TARGET services by 2026 and explore tokenised central bank money for cross-border interoperability.