TechFlow, November 25 — According to The Defiant, the European Central Bank (ECB) published an article stating that stablecoins pose a "risk" to financial stability, citing vulnerabilities related to de-pegging and potential adverse impacts on traditional financial markets in the U.S. and Europe.
The ECB criticized stablecoins for potentially "posing risks to financial stability through their inherent vulnerabilities and interconnections with traditional finance," noting that stablecoins could de-peg if investors lose confidence in their redeemability.
The report warned that a run on stablecoins, given the substantial holdings of Tether and Circle, could "trigger a sell-off of reserve assets," thereby shaking the $25 trillion U.S. Treasury market.
