Wed. May 31st, 2023

• Banks have experienced a significant number of failures due to the risks they bear.
• Regulated stablecoins issuers are required to rely on banking partners in order to fulfill minting and redemption through fiat money.
• Granting regulated fiat stablecoins access to central bank accounts would mitigate financial stability risks and promote payments innovation.

Banks Dominate Payments

Banks are currently dominating the payment market, but this needs to change in order for financial stability to be maintained. Regulated stablecoin issuers are forced to rely on banking partners in order to fulfill the minting and redemption through fiat money, which exposes them to disproportionate cost and counterparty risk. This ultimately constrains innovation and competition in the payments market.

Bank Failures Pose Risk

In March and April of 2023, four banks in the United States and one in Switzerland collapsed, with three being amongst the largest-ever US bank failures. This serves as a reminder that banks bear significant risks that can quickly spill over into other industries, creating instability within traditional finance as well as crypto-assets sectors.

Grant Access To Central Bank Accounts

In order to maintain financial stability, granting regulated fiat stablecoins access to central bank accounts is essential. This would allow issuers to eliminate their exposure to risks associated with uninsured deposits while also separating high-velocity payments activity from loan portfolios held by banks.

Markets In Crypto Assets (MiCA)

The Markets In Crypto Assets (MiCA) regulation brings new opportunities for Europe but it mandates that e-money token (EMT) issuers hold at least 30% of their reserves with credit institutions which does not entirely address the issue discussed above.


In conclusion, making accounts at Europe’s central banks accessible to payment companies such as stablecoin issuers would be a boon not only for financial stability but also for promoting innovation within payments markets worldwide.

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