Stablecoins: Implications for Monetary Policy, Financial Stability, Market Infrastructure and Payments, and Banking Supervision in the Euro Area

37 Pages Posted: 23 Oct 2020

See all articles by Fiona Echelpoel

Fiona Echelpoel

European Central Bank (ECB)

Maria Teresa Chimienti

European Central Bank (ECB)

Mitsutoshi M. Adachi

European Central Bank (ECB)

Phoebus Athanassiou

European Central Bank

Irina Balteanu

European Central Bank (ECB)

Thomas Barkias

European Central Bank (ECB)

Ioannis Ganoulis

European Central Bank (ECB) - Directorate General Economics

Danielle Kedan

European Central Bank (ECB)

Holger Neuhaus

European Central Bank (ECB)

Adam Pawlikowski

European Central Bank (ECB)

Günther Günther

European Central Bank (ECB)

Raphael Poignet

European Central Bank (ECB)

Stephan Sauer

European Central Bank (ECB)

Doris Schneeberger

European Central Bank (ECB)

Jens Tapking

European Central Bank (ECB)

Colm Toolin

European Central Bank (ECB)

Date Written: September, 2020

Abstract

This paper summarises the outcome of an analysis of stablecoins undertaken by the ECB Crypto-Assets Task Force. At the time of writing, the stablecoin debate lacks a common taxonomy and unambiguous terminology. This paper applies a definition that distinguishes stablecoins from existing forms of currencies – regardless of the technology used – and characterises stablecoin arrangements based on the functions they fulfil. This approach emphasises the role of technology-neutral regulation in preventing arbitrage, as well as comprehensive Eurosystem oversight, irrespective of stablecoins’ regulatory status. Against this background, this paper assesses stablecoins’ implications for the euro area based on three scenarios for the uptake of stablecoins: (i) as a crypto-assets accessory function; (ii) as a new payment method; and (iii) as an alternative store of value. While the first scenario is merely the continuation of the current state of the market and, thus far, has not posed concerns for the financial sector and/or central bank tasks, stablecoins of the type envisaged in the second scenario may reach a scale such that financial stability risks can become material, and the safety and efficiency of the payment system may be affected. The third scenario is both the least plausible and the most relevant from a monetary policy perspective. The paper concludes that the Eurosystem relies on appropriate regulation, oversight, and supervision to manage the implications of stablecoins (and the risks that stem from them) on its mandate and tasks under plausible scenarios. The Eurosystem continues monitoring the evolution of the stablecoin market and stands ready to respond to rapid changes in all possible scenarios.

Keywords: implications of stablecoins, oversight, regulation, stablecoins

JEL Classification: E42, G21, G23, O33

Suggested Citation

Echelpoel, Fiona van Echelpoel and Chimienti, Maria Teresa and Adachi, Mitsutoshi M. and Athanassiou, Phoebus and Balteanu, Irina and Barkias, Thomas and Ganoulis, Ioannis and Kedan, Danielle and Neuhaus, Holger and Pawlikowski, Adam and Philipp, Günther and Poignet, Raphael and Sauer, Stephan and Schneeberger, Doris and Tapking, Jens and Toolin, Colm, Stablecoins: Implications for Monetary Policy, Financial Stability, Market Infrastructure and Payments, and Banking Supervision in the Euro Area (September, 2020). ECB Occasional Paper No. 2020247, Available at SSRN: https://ssrn.com/abstract=3697295 or http://dx.doi.org/10.2139/ssrn.3697295

Fiona van Echelpoel Echelpoel (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Maria Teresa Chimienti

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Mitsutoshi M. Adachi

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Phoebus Athanassiou

European Central Bank ( email )

Sonnemannstrasse 20
Frankfurt am Main, 60314
Germany

Irina Balteanu

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Thomas Barkias

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Ioannis Ganoulis

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

Danielle Kedan

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Holger Neuhaus

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Adam Pawlikowski

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Günther Philipp

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Raphael Poignet

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Stephan Sauer

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

HOME PAGE: http://www.ecb.int

Doris Schneeberger

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Jens Tapking

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Colm Toolin

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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