Christine Lagarde has now said out loud what a lot of people in Europe have been circling around more politely.
That the case for promoting euro-denominated stablecoins is “far weaker than it appears”. Her argument is not that the technology is useless. It is that Europe should stop confusing the instrument with the outcome. If the goal is a stronger euro, safer payments and better digital infrastructure, then the real question is not whether Europe can mint a few more euro tokens. It is whether Europe is building the right monetary and payments architecture underneath them.
I think that is the right question to ask because the market is no longer hypothetical.
Stablecoins have grown from less than USD 10 billion six years ago to more than USD 300 billion today, and the market is still overwhelmingly dollar-based. At the same time, euro-denominated stablecoins remain tiny by comparison, with ECB analysis putting them at roughly €450 million in market capitalisation as of January 2026, up from about €50 million at the start of 2024. Is Europe then debating whether it wants to sponsor a very small local alternative inside a market whose gravity is still plainly elsewhere.
I think this debate is geting interesting.
Lagarde is sceptical.
France wants more euro stablecoins.
The Bundesbank has taken a more balanced line, arguing that stablecoins can be useful for settlement and payments in tokenised environments, while still warning about liquidity, operational and run risks.
DIGITALEUROPE says stablecoins can be valuable in specific tokenised use cases if they remain complementary, interoperable and tightly supervised. In other words, this is not a clean split between luddites and futurists.
It is a genuine argument about what belongs at the centre of the system and what belongs at the edge.
Why I still think much of crypto looks more like a casino than a payments revolution
If you want my blunt view, much of crypto today still looks less like the future of money and more like an online casino with better branding and worse tailoring.
That does not mean nothing useful is happening.
It does mean that, at this stage, the market still leans heavily toward crypto-native activity rather than ordinary economic life.
The IMF says current stablecoin use cases still focus mainly on crypto trades, with approximately 80% of stablecoin transactions conducted by bots and automated systems for arbitrage and rebalancing. BIS research says the vast majority of stablecoin activity remains tied to cryptocurrency trading and is dominated by non-retail participants. BCG and Allium Labs go in the same direction, concluding that only a small proportion of stablecoin activity today reflects real-economy payments.
Now, to be fair, that is not the whole story. BIS also notes that in some countries households and corporates are turning to stablecoins for remittances and cross-border payments, especially where domestic currencies are weak or capital controls are binding. And the BIS speech is careful not to dismiss the whole category. It says that where sound regulation is in place, stablecoins may have a role in specific corridors. But the same speech also says the evidence on efficiency is still inconclusive, points to Banca d’Italia work showing no systematic cost advantage, and notes that on- and off-ramp fees can push costs as high as 9% in some cases. So yes, there are real use cases. No, the case is not yet won.
This is also the point where I need to add the line we have used before on Fintech Daydreaming, not all stablecoin usage is by criminals, but all criminals seem to find stablecoins rather useful.
That is obviously not a formal statistical statement. But, the official and industry evidence behind it is hard to ignore. Chainalysis says illicit crypto transactions in 2025 still amounted to less than 1% of overall volume, so the whole market cannot simply be written off as criminal. But it also says stablecoins accounted for 84% of all illicit transaction volume in 2025. FATF has separately warned about stablecoin misuse through unhosted wallets and highlighted use in laundering, drug trafficking and sanctions-related activity. At the same time, the picture is not one-sided. FATF also acknowledges that price stability, liquidity and interoperability support legitimate uses, and Reuters reported that Tether said it had frozen $4.2 billion of tokens linked to illicit activity. So the serious conclusion is not “all stablecoins are criminal”. It is that the most convenient rail for a lot of legitimate digital activity has also become a very convenient rail for a lot of illegitimate activity.
The case for euro stablecoins deserves a fair hearing
If we are going to be balanced about this, the pro-stablecoin side does deserve equal focus. Europe already has live, regulated examples. Societe Generale-FORGE says its MiCA-compliant EUR CoinVertible is now live on Stellar, and Circle markets EURC as a MiCA-compliant, full-reserve euro stablecoin redeemable 1:1 for euro, with €371.1 million in circulation reported on 7 May 2026. As I see it, this is an attempt to build usable euro-denominated instruments inside digital asset markets that already exist.
The argument in favour is also not so wrong. DIGITALEUROPE says stablecoins can be useful settlement and liquidity instruments in specific tokenised market use cases, and that they may support faster settlement, greater transparency and programmable payments if they operate inside robust governance and supervision.
But this is again where I bring my current view back.
Even when the case is at its strongest, euro stablecoins still look to me like a complementary tool, not the foundation. That is also where Lagarde’s argument bites hardest. She is not saying private tokenised money has no role. She is saying the public infrastructure has to come first, because without a common anchor the market risks becoming fragile, fragmented and strategically dependent.
Is Lagarde is right about the architecture?
What I like in Lagarde’s speech is that she separates the monetary function from the technology function. That is a far more useful way to think about this than the usual crypto shouting match. Stablecoins do solve a genuine technology problem in tokenised markets. They provide a native on-chain cash leg for atomic settlement. Lagarde acknowledges this plainly. But she then asks whether that technical function necessarily justifies building the future of the euro around private stablecoins. Her answer is no, because the architecture matters more than the wrapper.
She then identifies two structural weaknesses in the stablecoin model as a foundation for settlement.
Fragility and fragmentation.
Fragility because pegs can break under stress, which means private stablecoins cannot provide the same unconditional finality as central bank money.
Fragmentation because a supposedly unified tokenised market ends up split across competing instruments and platforms, with no common anchor for convertibility.
ECB research goes further and warns that broader stablecoin adoption can trigger deposit substitution, raise banks’ reliance on wholesale funding and weaken the predictability of monetary policy transmission.
Andrew Bailey has made the same broader point from a different angle, warning that if stablecoins are going to become part of the architecture of global payments, they will need international standards and robust convertibility in stress.
Why I think the digital euro matters more to citizens than a euro stablecoin
From a consumer and citizen perspective, I remain much more convinced by the digital euro than by the idea of a euro stablecoin as Europe’s answer.
That is because the digital euro is trying to solve a public problem, not just a market plumbing problem. The ECB says it would be universally accepted across the euro area, free of charge for basic use, available online and offline, and designed so that offline transactions offer a level of privacy comparable to cash. It also says the digital euro would be accessible to financially and digitally vulnerable people, and that banks and other supervised intermediaries would remain the main interface for users. Money for citizens is about access, trust, privacy, resilience and universality.
The ECB says 13 out of 20 euro area countries currently rely on international card schemes for card payments. Piero Cipollone told Reuters in January that the digital euro is intended to provide the payments backbone Europe needs and help the euro area become more self-sufficient, adding that stablecoins only become a danger if Europe’s payment system fails to meet user needs. The ECB still says it is aiming to be ready for a potential first issuance in 2029, assuming the legislation is adopted in 2026. That timeline is slower than the market, yes. But the objective is bigger than issuing another tradable token. It is about preserving public money as a live option in a digital economy.
This is why I do not buy the argument that Europe’s monetary future should be reduced to a race to mint euro casino chips quickly enough to keep up with dollar casino chips.
A euro stablecoin may help specific market participants.
A digital euro is trying to serve the public.
That includes merchants, who the ECB says could benefit from a European alternative to international card schemes, and banks, which the ECB argues would remain central to distribution rather than being disintermediated. If 66% of Europeans say they would be interested in trying a digital euro once it is explained properly, then the public case is a serious design question about what kind of digital payments landscape Europe wants to live with.
What banks should do now
For banks, the practical answer is not to pick one religion and wait for salvation.
It is to modernise the architecture so that they can handle several forms of digital money safely.
Whether I like it or not, Europe is clearly moving toward a mixed world. Public money infrastructure is being built, tokenised deposits are being taken seriously, and regulated stablecoins are not going away. DIGITALEUROPE calls them complementary tools. Lagarde says tokenised commercial bank deposits may prove preferable for many wholesale uses. The digital euro, if it comes, will still be distributed through banks and supervised intermediaries. So the winners will not be the banks that place one heroic bet on one instrument. They will be the banks that build a thinner, cleaner core and more adaptable edges, so they can support whichever rail becomes relevant without rewriting the whole institution every time somebody in Brussels, Frankfurt, Paris or Washington changes the weather.
That is also why this debate aligns so closely with the argument in my book (you knew I would find an angle to promote my book!). Rip Out the Core was never really about ripping out a mainframe for sport. It was about stripping the banking platform back to what must remain deterministic, factual, governed and flexible. Then building the surrounding capability model so the institution can evolve without permanent architectural self-harm. Stablecoins fit neatly into that frame. Treat them as one possible instrument in a broader platform. Do not mistake them for the platform itself. Do not let the wrapper become the architecture. And do not imagine that a market still dominated by crypto trading bots, speculative flows and a worrying amount of criminal misuse has already solved the citizen side of money just because somebody managed to put a currency symbol on a token.
Europe does need better digital money. It needs better tokenised finance as well. But what it really needs most is a better foundation. On that point, Lagarde is right. And if Europe gets that foundation right, then euro stablecoins may find a sensible place in the house. They just should not be mistaken for the house.
The book Rip Out the Core will be published at the end of July 2026, but it is already available for preorder on Amazon.
Lagarde Is Right to Ask the Awkward Question About Euro Stablecoins
