ECB wants veto power on stablecoins in the euro zone

The European Central Bank wants veto power on the launch of stablecoins such as Facebook’s Diem in the euro zone and a greater role in their supervision, it has told European Union lawmakers, according to Reuters.

Central bankers around the world are worried that the rise of cryptocurrencies, especially stablecoins which derive their value from one or more official currencies. They fear that could dent control over payments, banking and, ultimately, the supply of money.

The EU set out plans in September to create comprehensive rules for crypto-assets, including stress tests as well as capital and liquidity requirements, saying Facebook would have to adhere to them before launching its proposed stablecoin in the bloc.

In a legal opinion on the EU rules, the ECB said it should have the final word on whether a stablecoin should be allowed to launch in the euro zone without jeopardising its control over inflation or the safety of payments.

The ECB said issuers of stablecoins should be subject to “rigorous liquidity requirements” similar to those applied to money market funds, including significant cash reserves, to help them withstand large client outflows.

Companies selling tokens linked to several currencies “should at a minimum grant end-users a direct claim on the issuer or on the reserve assets and redemption rights”, the ECB added.