Private Stablecoins Pose Risks to Financial Stability, says ECB
The European Central Bank (ECB) has raised concerns about stablecoins issued by private companies like PayPal, stating that they not only threaten financial stability but also hinder healthy competition in the market. According to ECB executive board member Fabio Panetta, private payment service providers have no incentive to limit the adoption of their stablecoins or the services they offer. Instead, their objective is to expand their customer base and gain market share.
Panetta highlighted that companies like PayPal can generate significant revenue by reinvesting reserve assets in financial tools with positive interest rates. However, they may not be interested in making their payment solutions compatible with existing ones. In contrast, the proposed European central bank digital currency (CBDC), known as the digital euro, aims to promote innovation and competition while ensuring orderly adjustments in the financial sector.
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