The European Union is banning any kind of global stable coin project until the risks to monetary sovereignty have been addressed. In a statement issued by the Council of the European Union and the European Commission, the authorities admitted that stable coins could be effective at delivering fast and low-cost payments, but they also have a lot of risks and challenges.
The statement was approved by the European Economic and Financial Affairs Council, which is one of their oldest setups. It was issued on December 5. A spokesperson told reporters that although the Council's statement does not have a specific legal authority, it does signal how the member states feel about the issue of stable coins. It also promotes a path for future legislative action in member countries.
The European Union authorities also outlined the risks and issues with adopting stable coins for payments. If those coins are used on a global scale, they pose a threat to the monetary sovereignty of each member country. In their statement, the authorities argue that the use of stable coins put a risk to consumer privacy and protection. There are also challenges around taxing, money laundering, financing of terrorism, market integrity, governance, cybersecurity and operational resilience that need to be addressed. All of those issues affect safety, efficacy and stability of payment systems. Issues of competition may also be at play.
The European Union suggests that the challenges require a coordinated effort from all jurisdictions. Entities that issue stable coins would have to provide the member countries with sufficient information for a complete assessment of how the coins could affect existing laws and regulations.
The Council and Commission authorities went on to state that no stable coin should begin operating within the European Union until all risks and potential problems have been addressed. The authorities added that they welcome central bank participation in assessing the costs and benefits of central bank digital currencies for fast international payments that will not cost consumers an arm and a leg. Also on December 5, the governor of France's central bank announced plans to test digital Euros.