Stablecoins are becoming an important part of digital finance, offering a way to transfer value through blockchain networks while maintaining a price linked to a traditional currency.
Their growing role, however, raises questions about how their reserves should be managed and whether their connection to commercial banks could create risks for the wider financial system.
<h3>Why Central Banks Want Different Reserve Requirements</h3>
Under the existing MiCA framework, stablecoin issuers generally must hold at least 30% of their reserves in bank deposits. The minimum rises to 60% for significant stablecoins, which are subject to stricter requirements because of their scale and potential importance to financial markets.
These rules are intended to support redemptions and ensure that issuers can return money to token holders when requested. However, central banks argue that the same requirements could create vulnerabilities for commercial lenders.
When stablecoin issuers place substantial reserves with banks, those funds become part of the banks' funding structure. Unlike ordinary retail deposits, which may be distributed across many customers with different withdrawal patterns, deposits from stablecoin issuers can be concentrated and respond rapidly to market conditions.
A sudden loss of confidence in a stablecoin could prompt large-scale redemptions. The issuer might then withdraw reserves from its banking partners to meet customer requests, putting pressure on those banks' liquidity.
<h3>A Shift Toward Short-Term Liquid Assets</h3>
The central banks have proposed replacing the fixed bank-deposit percentages with a requirement that a minimum portion of reserves be held in assets maturing within one to five working days. The aim is to prioritise access to funds when redemptions rise, rather than relying primarily on the location where reserves are held. Short-maturity assets may offer issuers a way to manage liquidity while reducing their dependence on bank deposits.
The proposal does not mean that bank deposits would necessarily disappear from stablecoin reserves. Instead, it would alter the regulatory emphasis toward the speed at which assets become available.
Effective implementation would still depend on the quality of eligible assets, their market liquidity and the issuer's ability to meet unusually large redemption requests. Assets that mature soon are not automatically free from risk, and market disruptions can make some securities harder to sell at an acceptable price.
<h3>How Stablecoins Can Affect Banking Stability</h3>
The relationship between stablecoins and commercial banks works in both directions. Banks may benefit from deposits supplied by issuers, but the stability of that funding depends on how holders use the tokens and how issuers respond to market stress.
A large, sudden withdrawal could force a bank to replace lost funding with other sources, potentially at a higher cost. Where many institutions face similar pressures simultaneously, liquidity stress could spread beyond the original stablecoin.
Stablecoins also create risks for their holders. A token designed to maintain a fixed value depends on confidence in its reserve assets, redemption arrangements and the issuer's operational capacity. A stablecoin's target price does not guarantee that every holder can always sell or redeem it immediately at that value under all market conditions.
<h3>Regulatory Oversight Remains Important</h3>
The central banks have raised concerns about enforcement of existing European crypto rules, including the continued availability of services from companies that do not meet licensing requirements. Inconsistent compliance can make it harder for customers to understand which providers operate within the regulatory framework.
They have also warned about models in which tokens issued in different jurisdictions are treated as interchangeable. Such arrangements may complicate the management of reserves and redemptions if authorities cannot clearly establish which assets support which tokens and where those tokens are held.
<h3>Expert Insight</h3>
Isabel Schnabel, a member of the ECB's Executive Board, addressed the role of stablecoins in the financial system in an official speech on 28 August 2026: “Stablecoins are best understood as complements to central bank money, not substitutes for it.”
The ECB and other EU central banks want stablecoin reserve rules to focus more directly on liquidity and the ability to meet redemptions. Replacing fixed bank-deposit percentages with requirements for short-maturity assets could reduce certain funding vulnerabilities, although the effectiveness of the approach will depend on the assets permitted and the safeguards applied.
As stablecoins become more integrated into digital finance, clear reserve standards, consistent supervision and reliable redemption mechanisms will remain essential. The challenge is to support useful financial innovation while limiting the risk that sudden movements in digital markets spread into the traditional banking system.
