Finally, the European Central Bank submitted its formal opinion on crypto legislation to the European Commission.
According to Reuters, the ECB has requested EU policymakers to veto private stablecoin ventures such as the Facebook-backed Diem. An section from the ECB opinion paper reads as follows:
“Where an asset-reference arrangement is tantamount to a payment system or scheme, the assessment of the potential threat to the conduct of monetary policy, and to the smooth operation of payment systems, should fall within the exclusive competence of the ECB.”
As part of its call for veto powers on stablecoins, the ECB has encouraged the EU to guarantee that its ruling is binding on all national authorities in the euro area. According to the ECB, stablecoin issuers must fulfill the same robust liquidity criteria as banks and other conventional financial entities.
For the ECB, certain “rigorous liquidity requirements” are required to ensure the security of redemption rights and direct consumer claims on reserve reserves owned by stablecoin issuers.
Indeed, the ECB has previously voiced its worry about the potential “bank run” of stablecoins back in September 2020.
If EU legislators give veto powers to the ECB, then private stablecoin issuers like Diem can face more regulatory obstacles even if the project secures approval from Swiss regulators.
ECB President Christine Lagarde is a well-known opponent of stablecoins and cryptocurrencies in general. As previously stated by Cointelegraph, Lagarde recently ruled out the prospect of central banks owning Bitcoin (BTC) one day in the middle of a surge of public companies introducing the biggest cryptocurrency to their balance sheets by market capitalization.
On the topic of the digital euro, the ECB has announced that it is working for a launch in the next four years. However, any digital euro created by the ECB would be excluded from current EU digital currency regulations.