Global stablecoins in 2030: a European perspective
Title: Global stablecoins in 2030: a European perspective
Summary: This paper analyses the long-term consequences of different stablecoin adoption scenarios through a calibrated three-region flow-of-funds model
Authors: Ulrich Bindseil (Technical University Berlin), Romain Meuwissen (ESM), Giorgio Mondini (Frankfurt School of Finance and Management), Martin Rohár (ESM)
Abstract: This paper examines the implications of global stablecoin adoption for the monetary and financial architecture, with particular emphasis on the euro area. It employs a flow-of-funds framework tracing sectoral and cross-border balance-sheet adjustments as a function of funding sources and reserve asset composition, operationalised through a calibrated three-region model (United States, euro area, rest of the world), embedding alternative stablecoin growth scenarios for USD- and EUR-denominated stablecoins through 2030. The analysis finds that, even under high stablecoin growth assumptions, aggregate effects on the euro area financial system would likely remain manageable. The principal structural effect on banks is the conversion of stable, inexpensive retail deposits into more volatile and costly wholesale funding. Effects on securities markets, while meaningful in terms of demand reallocation toward short-term sovereign instruments, are likewise assessed as manageable. Stablecoin-specific financial stability risks, though real, are not fundamentally novel and are amenable to standard regulatory mitigation tools. Stablecoins are best understood as part of the continuing evolution of monetary architecture, the significance of which will depend on the efficiency gains they ultimately deliver and the adequacy of the regulatory environment. While financial stability and monetary architecture risks appear manageable, other important societal issues, such as their significant use for illicit payments and regulatory arbitrage, deserve more scrutiny.
Disclaimer: This Working Paper should not be reported as representing the views of the ESM. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the ESM or ESM policy. No responsibility or liability is accepted by the ESM in relation to the accuracy or completeness of the information, including any data sets, presented in this Working Paper.
Keywords: Stablecoins, flow of funds, financial intermediation, financial stability, financial regulation, monetary architecture, dollarisation, international role of the euro, bank funding, digital money
JEL codes: E42, E44, G28, O33