European Central Bank (ECB) President Christine Lagarde has called on European Union (EU) lawmakers to impose strict standards and protections on foreign stablecoins. She asserted that these digital currencies should align with the bloc’s regulatory framework before being allowed to operate within EU territories. This statement was made during her speech at a conference by the European Systemic Risk Board (ESRB) in Frankfurt on Wednesday.

During a potential stablecoin crisis, Lagarde warned that investors might redeem their holdings in regions with greater safeguards, notably the EU, where the Markets in Crypto-Assets (MiCA) regulation prohibits redemption fees, possibly harming local reserves. She stated:

“The risk of liquidity mismanagement across jurisdictions is one we have seen before. Banking groups, for example, are already required to ensure that reserves are available in the part of the group where and when they are needed.”

Lagarde emphasized the importance of rigorous regulations to prevent market arbitrage and ensure financial stability on an international scale.

Stablecoins, which are digital tokens pegged to traditional assets like fiat currencies, have become a focal point in governmental and regulatory discussions regarding digital assets in 2025. Major regions, including the U.S. and Hong Kong, have also enacted laws governing stablecoin issuance and regulations, following the EU’s lead with MiCA.