Are stablecoins stable? European Central Bank: The term "stablecoin" is misleading and confusing.

The European Central Bank (ECB) released a report in September on stablecoins, stating that stablecoins can only be considered "stable" if they are well-designed and properly regulated. However, the existing regulatory environment does not allow stablecoins to truly serve as a stable alternative to fiat currencies. While they may be used as a means of payment, the report suggests that their name should be changed to reduce misleading perceptions. Report link

The Term "Stablecoin" Is Not Appropriate

In the latest report on stablecoins, the European Central Bank (ECB) questions the accuracy of the term, suggesting it could be confusing and misleading for users. The report emphasized:

The term "stablecoin" might be understood literally as a currency with stable value and usability, but these characteristics are not inherent to stablecoins; they are achieved through sound design and effective risk management. Therefore, the name should not focus solely on emphasizing the "stable" aspect.

Furthermore, the ECB believes that the current regulatory framework is too fragmented, and stablecoins require an appropriate regulatory framework. The central bank has the necessary mechanisms to establish specific regulations and emphasizes that within the euro system's regulatory framework, there is the capability to operate stablecoins as a payment system.

ECB President: "Digital Euro" Can Only Complement

In fact, Europe has been actively adopting and implementing digital finance in recent years, aiming to compete internationally and take a leading position in this field. Former European Commissioner for Economic Affairs Valdis Dombrovskis previously stated:

Europe must seize the opportunity to set global standards for digital finance to enhance its international standing and lead in this emerging technology. The first use case will be cryptocurrencies, and I believe digitalization is the future of finance.

However, digital currencies may only complement the euro in the European system in the future. ECB President Christine Lagarde stated during a joint parliamentary session in France and Germany on the 21st, stating:

The digital euro can only be a complement to cash and cannot fully replace it. In a more digitalized economy in the future, we still need to ensure the strength and sovereignty of the European payment system. Therefore, we are exploring the advantages, risks, and challenges of the digital euro. We will ensure that sovereign currency remains at the core of the European payment system.

It is understood that Christine Lagarde took over as ECB President in November last year, transitioning from the International Monetary Fund (IMF).

The report emphasizes that under the appropriate regulatory framework, stablecoins will play a significant role in the digital economy, and Europe will continue to monitor changes in the stablecoin market to make swift decisions in any potential future scenarios.