Dollar-backed stablecoins: Not a threat in the EU
Despite rapid growth in terms of capitalization and rising cross-border flows, dollar-backed stablecoins face significant barriers in the Euro Area. Exchange rate and issuer risks, coupled with strict EU regulation, private initiatives and the digital euro project, limit their potential to disrupt European financial systems; however, regulators and traditional financial services providers should continue to pay close attention to the fast development of decentralized finance and key assets like stablecoins.