Why ECB President Christine Lagarde Rejects Europe’s Answer to the GENIUS Act

European Central Bank (ECB) President Christine Lagarde rejected calls for euro-denominated stablecoins, arguing they cannot strengthen the currency’s international role and could destabilize bank funding across the eurozone.

Speaking at the Banco de España LatAm Economic Forum in Roda de Bará, Spain, Lagarde framed the speech as a direct rebuttal of the US GENIUS Act and the argument that Europe must answer with its own dollar substitute.

Two Functions, One Policy Split

Lagarde separated stablecoins into two functions to set up her case, arguing that conflating the two has distorted European policy.

• The monetary function extends a reserve currency’s global reach.
• The technological function provides on-chain settlement for tokenized assets.

Stablecoins now top $324 billion in market value. Nearly 98% are denominated in dollars, with Tether and Circle issuing roughly 90%.

Stablecoin Market Cap. Source: DefiLlama

Transaction flows already hit 7.7% of GDP across Latin America and 6.7% across Africa and the Middle East. Lagarde used those numbers to show the dollar’s reach is already deeper than the euro’s outside Europe.

“Stablecoins reduce those frictions, as digital access is faster and easier than hard cash, and it reaches savers in countries where weak currencies can erode savings. In economies where access to a stable currency has historically been constrained, transaction flows already reach around 7.7% of GDP in Latin America and 6.7% in Africa and the Middle East,” she explained.

The US GENIUS Act, signed in 2025, framed federal stablecoin oversight as a tool for preserving dollar primacy. She quoted that intent to contrast it with Europe’s Markets in Crypto-Assets Regulation (MiCAR), which entered force in 2024.

Industry Challenges the Diagnosis With Europe’s Alternative Path in Focus

However, critics outside the bank ecosystem reject Lagarde’s framing, with Rand Hindi, founder of encryption firm Zama, issuing a sharp on-the-ground counterargument.

“And yet, the entire developing world is adopting the dollar thanks to USDT. This is the next petrodollar, it’s so obvious to anyone who has been on the ground…” he noted.

Hindi also pointed at dollar adoption inside the bloc itself. He claimed European startups raise, invoice, and pay in dollars and use euros only for tax obligations.

Lagarde used the speech to spotlight infrastructure work the Eurosystem already has underway. The Pontes pilot will link distributed ledger platforms to TARGET for wholesale settlement in central bank money from September.

The Appia roadmap targets a fully interoperable European tokenized ecosystem by 2028. Earlier 2024 trials settled roughly 1.6 billion euros across nine jurisdictions in 50 transactions.

Lagarde argued that a public anchor would let MiCAR-compliant stablecoins and tokenized bank deposits compete on safer ground without ceding settlement rails to dollar issuers.

The split is now explicit.

• Washington is building a dollar moat through private stablecoin issuance.
• Frankfurt is betting that public infrastructure and a deeper capital union will keep the euro relevant on chain.

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