The European Systemic Risk Board, led by Christine Lagarde, calls for enhanced supervision of cross-jurisdictional stablecoins to prevent systemic risks and ensure regulatory compliance within the EU, amid ongoing digital euro plans.

The European Systemic Risk Board (ESRB), which acts as the EU’s financial stability guardian and is led by none other than the President of the European Central Bank, Christine Lagarde, has issued a pretty urgent call—basically, they’re pushing for stronger oversight and safeguards specifically for stablecoins that are, at least partially, issued within the European Union. The focus here is mainly on multi-issuer stablecoin arrangements. These are the setups where different entities, some within the EU and others outside, cooperate to create fungible stablecoins. The ESRB warns that such cross-jurisdictional schemes—well, they inherently carry vulnerabilities that could really threaten the financial stability of the EU if things go sideways.

Right now, the EU has one of the toughest regulations around crypto assets—this is through their Markets in Crypto-Assets (MiCA) regulation, which sets pretty strict requirements for stablecoin issuers based within the EU. For instance, these include holding sufficient reserves of high-quality liquid assets, meeting minimum own funds requirements, and establishing crisis tools such as recovery and redemption plans to shield token holders. But honestly, the ESRB and ECB are concerned that stablecoins issued partly outside the EU might not fully comply with these rules, potentially bypassing safeguards and undermining the EU’s regulatory aims. This could, in turn, leave the system vulnerable to liquidity squeezes—especially during times of market stress.

The main regulatory challenge, as I see it, is that investors tend to prefer redeeming stablecoins within the EU—where protections are supposedly strongest—particularly when things get rocky in the market or when there’s a run on the asset. But the reserves held inside the EU might not be enough to handle such a concentrated demand. This could force the ECB into a reactive position, trying to stabilize the situation after the fact. Plus, many countries outside the EU either have no stablecoin rules at all or have regulations that leave out some critical systemic risk and crisis management measures. This regulatory patchwork—sometimes called fragmentation—creates a loophole that multi-issuer stablecoins could exploit. The standards across different jurisdictions aren’t exactly uniform, which increases systemic risks.

Christine Lagarde has repeatedly emphasized the need for “robust equivalence regimes,” meaning that stablecoin issuers outside the EU should be held to standards comparable to those within the Union. She’s also strongly urging EU lawmakers to make sure that stablecoin projects operating within the Single Market don’t get a free pass by using laxer rules elsewhere. Interestingly enough, these multi-function groups—operating stablecoins across differing regulatory landscapes—might actually face less oversight than traditional financial groups, which is troubling because it can heighten systemic risk.

On top of that, officials from various national central banks, like Italy’s, have pointed out that these multi-issuance stablecoins pose a notable threat to the EU financial system too. These schemes complicate supervision and make it harder to manage potential shocks that originate outside the EU but could still impact its markets. The ESRB is calling for a more harmonized global approach—something that would ensure consistent and transparent supervision for all stablecoin issuers whose tokens circulate within the EU’s jurisdiction.

At the same time, the EU is making moves toward creating a digital euro—a central bank digital currency (CBDC)—which could serve as a safe, accessible alternative to cash, bolster financial resilience, and cut back on reliance on potentially unstable private stablecoins. EU decision-makers are apparently eyeing a decision on the digital euro by the end of 2025, with a possible rollout by 2029. This is quite a significant shift in the EU’s digital currency and overall financial stability plan.

All in all, the ESRB’s stance makes it clear that even though the EU is quite rigorous in regulating crypto-assets, there are still big gaps—gaps that only international coordination and full regulatory equivalence can close. Without addressing these loopholes, the chances of liquidity crises sparked or worsened by stablecoins—especially ones linked to weaker regulatory regimes—could even threaten the EU’s entire financial system. The urgent call for tighter regulation isn’t just about reacting to current issues; it’s about recognizing that the borderless nature of stablecoins means supervision also needs to be truly cross-border.

[References to original sources have been included in the footnotes for further reading.]

Source: Noah Wire Services

Verification / Sources

  • https://bitrss.com/esrb-calls-for-immediate-oversight-of-eu-linked-stablecoins-132190 - Please view link - unable to able to access data
  • https://www.reuters.com/business/finance/eu-risk-watchdog-calls-urgent-safeguards-stablecoins-2025-10-02/ - The European Systemic Risk Board (ESRB), led by ECB President Christine Lagarde, has called for urgent safeguards on stablecoins partially issued within the EU. Concerns focus on 'multi-issuer' stablecoin arrangements, where issuers inside and outside the EU collaborate, potentially exposing the bloc to financial risks during market stress. The ESRB emphasizes the need for consistent oversight across jurisdictions to prevent regulatory arbitrage and reduce systemic financial risks associated with cross-border stablecoin arrangements.
  • https://www.reuters.com/business/finance/eu-should-close-gaps-stablecoin-rules-ecbs-lagarde-says-2025-09-03/ - ECB President Christine Lagarde has urged EU legislators to strengthen regulations surrounding stablecoins, particularly those issued by foreign entities. Speaking at a regulatory conference, Lagarde emphasized the need for 'safeguards' and 'robust equivalence regimes' to prevent the risk of destabilizing reserve runs on EU-held assets. She stated that any stablecoin schemes operating within the EU should only be allowed if they are backed by strong regulatory frameworks in their home jurisdictions and ensure secure asset transfer mechanisms between the EU and non-EU regions.
  • https://www.esrb.europa.eu/news/pr/date/2025/html/esrb.pr250703~151d0e13da.en.html - The General Board of the European Systemic Risk Board held its 58th regular meeting on 24 and 26 June 2025. The meeting addressed financial stability risks in the EU amid ongoing trade uncertainty and geopolitical tensions. The Board discussed the need for enhanced regulatory and supervisory standards, particularly concerning crypto-assets, and emphasized the importance of reinforcing crypto-asset regulation to maintain financial stability.
  • https://www.coindesk.com/policy/2025/09/03/ecb-president-lagarde-calls-for-firm-safeguards-on-foreign-stablecoins/ - ECB President Christine Lagarde has called for firm safeguards on foreign stablecoins operating within the EU. She urged EU lawmakers to impose stringent equivalence requirements and safeguards on foreign stablecoins, emphasizing that they should comply with the bloc’s regulatory standards before operating on EU soil. Lagarde cautioned that during a stablecoin run, investors would be more likely to redeem in jurisdictions with stronger protections, such as the EU, where Markets in Crypto-Assets (MiCA) regulation prohibits redemption fees, potentially depleting local reserves.
  • https://www.pymnts.com/cryptocurrency/2025/european-union-watchdog-sniffs-out-vulnerabilities-multi-issuer-stablecoins/ - Europe’s financial risk regulator, the European Systemic Risk Board (ESRB), has called for stronger regulations governing 'multi-issuer' stablecoins. At its meeting on October 2, 2025, the ESRB emphasized that third-country multi-issuer schemes—with fungible stablecoins issued both in the EU and outside—have built-in vulnerabilities requiring an urgent policy response. The Board also noted that multi-function groups may operate under regulatory regimes more lenient than those for financial conglomerates, raising concerns about divergent prudential standards.
  • https://www.theblock.co/post/369439/european-central-bank-chief-warns-stablecoin-risks - Christine Lagarde, President of the European Central Bank, has urged the European Union to hold non-EU stablecoin issuers to the same stringent reserve requirements as their EU counterparts to address the risk of runs. Speaking at the annual conference of the European Systemic Risk Board, Lagarde highlighted that 'gaps remain' in the EU's current Markets in Crypto-Assets (MiCA) regulation regarding requirements for stablecoin issuers, particularly in joint issuance schemes where EU and non-EU entities issue fungible stablecoins together.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We've since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 10

Notes: The narrative is based on a recent press release from the European Systemic Risk Board (ESRB), dated October 2, 2025, highlighting the urgency of implementing safeguards for stablecoins partially issued within the European Union. (reuters.com)

Quotes check

Score: 10

Notes: The direct quotes from Christine Lagarde, President of the European Central Bank, are consistent with her recent statements on the need for robust equivalence regimes for foreign stablecoin issuers. (reuters.com)

Source reliability

Score: 10

Notes: The narrative originates from a reputable organisation, the European Systemic Risk Board (ESRB), which is led by Christine Lagarde, President of the European Central Bank. (reuters.com)

Plausability check

Score: 10

Notes: The claims regarding the vulnerabilities of multi-issuer stablecoin arrangements and the need for consistent oversight across jurisdictions are plausible and align with recent discussions on financial stability and regulatory challenges posed by cross-border stablecoin operations. (reuters.com)

Overall assessment

Veredict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative is based on a recent press release from the ESRB, quoting statements from Christine Lagarde, and aligns with current discussions on the need for enhanced oversight of multi-issuer stablecoin arrangements to ensure financial stability within the EU.