The $300 billion backdoor threat that Europe didn’t see coming

Stablecoins, now valued at over $303 billion, have evolved from simple crypto tools into deeply integrated components of global finance, creating systemic risk pathways for Europe. European Central Bank (ECB) officials, including Fabio Panetta and Jürgen Schaaf, warn that a disorderly collapse of these dollar-pegged tokens, which are primarily backed by US Treasuries, could reverberate across the financial system, especially if forced liquidations spike global yields. Olaf Sleijpen detailed a two-stage transmission: a run on stablecoins forces issuers to sell Treasuries, which then raises global yields and tightens European financial conditions, effectively forcing the ECB to respond to instability originating from the US dollar system—a phenomenon termed "stealth dollarization." European authorities, including the European Systemic Risk Board, are modeling these risks, particularly concerning multi-issuer stablecoins that might drain local reserves first. The counter-strategy involves promoting tightly regulated, euro-denominated stablecoins and advancing the digital euro to reduce reliance on offshore dollar tokens and maintain the ECB's monetary control, anticipating the market could reach $2 trillion by 2028.

(Source：CryptoSlate)