The growing use of stablecoins could further reinforce the global influence of the U.S. dollar and potentially weaken the monetary independence of other countries, according to European Central Bank (ECB) board member Isabel Schnabel. Her remarks come as digital assets tied to traditional currencies continue to gain traction across global financial markets.
Stablecoins are cryptocurrencies designed to maintain a stable value by being linked to assets such as government-issued currencies. While their overall use remains relatively limited compared to traditional financial systems, adoption has been increasing rapidly, prompting concerns among central bankers and policymakers about their long-term impact on the global monetary order.
Schnabel warned that the expanding use of stablecoins, particularly those linked to the U.S. dollar, could reinforce the dollar’s dominance in international finance and reduce the influence of other major currencies, including the euro. The majority of stablecoins currently in circulation are backed by the U.S. dollar, making the American currency the primary reference point within the rapidly growing digital asset sector.
Speaking at a conference hosted by the Bank of Korea in Seoul, Schnabel highlighted concerns that the rise of dollar-backed stablecoins may strengthen the dollar’s position not because of stronger economic fundamentals, but due to network effects and the advantages gained by early market leadership.
“The dollar’s dominance would be reinforced, not necessarily owing to stronger economic fundamentals but due to network effects, scale and first-mover advantages,” Schnabel said.
Economists have noted that widespread stablecoin adoption could slow or even reverse the gradual decline in the dollar’s share of global foreign exchange reserves. According to International Monetary Fund data, the dollar’s share of global reserves has fallen from around 70 percent at the beginning of the century to below 57 percent in recent years as other currencies gained ground.
The ECB official also cautioned that increased dependence on dollar-based stablecoins could undermine the ability of some central banks to effectively implement monetary policy. Countries with weaker policy credibility may be particularly vulnerable if individuals and businesses increasingly rely on digital assets tied to the U.S. currency rather than local financial systems.
Schnabel further suggested that the trend could create a cycle in which greater adoption of dollar-backed stablecoins weakens confidence in domestic monetary systems, encouraging even more users to shift toward digital dollar-linked assets
From a European perspective, she indicated that such developments could eventually limit the euro’s role in emerging areas of tokenised finance and reduce its influence within the broader international monetary system.
The remarks reflect growing concerns among global policymakers over how rapidly expanding stablecoin markets could reshape financial power structures, influence cross-border payments, and affect the balance between national currencies in the digital economy. As stablecoin adoption accelerates, regulators and central banks are increasingly examining their potential impact on monetary sovereignty and financial stability.
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