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Europe’s central banks recommend easing stablecoin bank-deposit reserve rules
Under the European System of Central Banks proposal, reserve requirements could shift from mandatory commercial bank deposits to specified short-maturity assets, reducing linkage to banks’ ability to meet withdrawals.
European central banks are seeking to change how stablecoin issuers hold reserves under EU rules, challenging a requirement that ties a portion of reserves to commercial bank deposits, according to CryptoSlate. Under the Markets in Crypto-Assets regulation, stablecoins issued by electronic-money institutions must keep at least 30% of reserves in commercial bank deposits, rising to 60% for significant tokens. CryptoSlate reports that the European System of Central Banks, including the European Central Bank and EU national central banks, recommended replacing that compulsory deposit share with minimum reserve percentages held in assets maturing within one and five working days. CryptoSlate adds that Britain’s approach is already different. Its draft systemic sterling stablecoin Code of Practice excludes commercial bank backing due to financial, operational, and contagion risks, and the consultation deadline is the same day the EU recommendation was reported. The Bank of England plans to finalize its code by the end of 2026. The reporting highlights why both sides are reconsidering bank-linked reserves, noting that placing stablecoin reserves in banks can connect the stablecoin and banking systems during stress. CryptoSlate cites the ECB explanation that bank failure can undermine confidence in reserve quality and availability, and it references USDC’s March 2023 peg loss involving backing at Silicon Valley Bank, as an example of the risk that can flow from banking troubles to stablecoin holders. The article also describes how, in the opposite direction, rapid redemptions could force issuers to withdraw large deposits to repay holders, potentially transmitting a run into banking liquidity.
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