Christine Lagarde Warns Against The Adoption Of Stablecoins

Why so much relentless opposition from central banks against stablecoins? What seems to be merely a balancing tool in the crypto universe is becoming Lagarde’s nemesis. Should we see a hidden flaw in it? These so-called “stable” cryptos do shake up the established order, yes. But could they be taking over the very essence of what States consider their ultimate lever of power: money?

Public Money, Private Interests: The Dilemma That Shakes Lagarde

After the alert issued by the BIS and the Bank of France on stablecoins, Christine Lagarde doesn’t mince her words. From a panel in Portugal, she stated :

I consider money as a public good, and we as public servants charged with protecting it. 

Stablecoins, these cryptocurrencies backed by fiat currencies, are issued by private companies like Tether or Circle. In 2024, USDT exceeded 110 billion dollars in circulation. For the ECB, this hegemony deprives central banks of a key tool: monetary policy.

Lagarde fears a mix-up among three concepts: money, means of payment, and infrastructure. For her, stablecoins feed this ambiguity. They are neither an official currency nor a simple payment app, but an uncontrolled in-between.

On the other side, Andrew Bailey, governor of the Bank of England, shares the analysis:

They claim to fulfill the function of money’s medium of exchange, and therefore must meet the criterion of money… which essentially means guaranteeing the preservation of their nominal value. 

The fear? Losing control over the interest rate lever, inflation, and ultimately… sovereignty.

Crypto, Euros, and Confusion: What the Public Often Ignores

Crypto moves fast, and institutions struggle to keep up. But why this sudden pressure to regulate stablecoins?

Lagarde sees an urgency here:

My concern is that this confusion leads to the privatization of money.

A nightmarish scenario for bank governors. When users prefer a USDC over the euro, the ECB’s power melts away. In June, Lagarde pushed the European Parliament to speed up the launch of the digital euro. The goal: counter this crypto invasion.

But while Europe hesitates, others are moving. In the United States, the GENIUS Act sets a legal framework for stablecoins. In South Korea, capital flight toward these assets pushes Seoul to relax forex regulations.

The president of the Bank of Korea, Rhee Chang-yong, sums it up: “Without regulation, stablecoins could sabotage our capital flows.”

Meanwhile, the average user often confuses crypto, stablecoin, and digital euro. The real issue lies there: the semantic battle before the economic battle.

Stablecoins: The Quantified Anchor of a Paradigm Shift

To measure the influence of stablecoins, nothing beats the numbers. Their growth is no longer hypothetical but concrete, anchored in usage.

Behind Christine Lagarde’s alert hides a skyrocketing growth:

• 160 billion dollars: total value of stablecoins in circulation worldwide in 2024;
• USDT (Tether) represents over 65% of the global market;
• More than 80 central banks worldwide are exploring or developing their own digital currencies;
• In Europe, the digital euro is technically ready but still awaiting political approval;
• Dollar-backed stablecoins are attracting a growing share of financial flows, to the detriment of local currencies.

At the Sintra conference, Jerome Powell decided:

If we are going to have stablecoins — and apparently we will — there needs to be a regulatory framework.

The message is clear: they’re already here. The numbers don’t lie. They show that the future of money may well be rewritten outside the walls of central banks.

What banks fear may already be underway: the internet belongs to stablecoins . The network increasingly relies on these stable cryptos for exchange, commerce, and payment. The real question is not “should they be regulated?”, but rather: who owns the new infrastructure of the digital world?