Out of three potential stablecoin scenarios, two could potentially lead to concerns for EU market integration and interoperability, as well as to risks to financial stability, therefore affecting safety and efficiency of the payment system, according to the European Central Bank (ECB).
In their recent report, the ECB Crypto Assets Task Force said that stablecoins may fall outside of the scope of the Single Euro Payments Area (SEPA) Regulation “that harmonises the way cashless euro payments are made across Europe and mandates interoperability.”
Stablecoin initiative such as Facebook‘s Libra, said the paper, could potentially lead to a pan-European coverage, but a pan-European reachability (having the ability to make payments at the national and EU level under the same conditions for all consumers) could necessitate “a deliberate effort.”
Additionally, should there be multiple stablecoin arrangements, the situation may lead to a fragmentation across the arrangements’ networks. “From a demand side perspective, users may face trade-offs between convenience on the one hand and additional costs (e.g. cash-out and other fees, idle balances) and switching barriers on the other hand,” the paper argued.
Within the paper, the Task Force aimed to assess stablecoins’ implications for the euro area based on three scenarios for the uptake of stablecoins, as they explained: