99Bitcoins Exclusive: ECB Sounds Stablecoin Alarm; Eco CMO Says “The Cat Is Out of the Bag”

The European Central Bank has sounded the alarm on stablecoins, warning that dollar-pegged digital assets pose serious risks to eurozone banks and monetary sovereignty. As ECB stablecoin battle continues, in an exclusive chat with 99bitcoins.com, Jay Kurahashi-Sofue, CMO of stablecoin liquidity layer Eco, said, “At this point, the cat is out of the bag.”

In a working paper published in March 2026, the ECB used confidential data on euro area banks to demonstrate how stablecoin adoption correlates with deposit flight, reduced lending, and weakened monetary policy transmission. “Stablecoins in general may represent a bigger concern than cryptocurrencies,” warned Dutch central bank chief Olaf Sleijpen, citing “their close links to the broader crypto ecosystem” and gaps in US regulatory oversight.

“In other words, stablecoins can reduce the amount of credit banks provide to the real economy,” the ECB paper said.

But Eco CMO Kurahashi-Sofue defended stablecoins and said, “We’re ultimately heading toward a hybrid system where both, banks and stablecoins, coexist. Permissionless financial rails are gaining momentum because they allow anyone to build, connect, and move value globally without permission from intermediaries. That open model tends to accelerate innovation and network effects.”

“But that doesn’t mean permissioned systems will disappear. Traditional financial institutions still operate in environments that require compliance, risk controls, and regulated access.”

The ECB Stablecoin Battle

“In the early days of the internet, companies experimented with closed, permissioned networks while the open internet evolved alongside them. The open internet ultimately became the dominant global infrastructure, but permissioned systems like corporate intranets still play an important role inside organizations,” said Kurahashi-Sofue.

“Finance will likely evolve similarly: permissionless rails becoming the broader global layer, with permissioned systems continuing to operate within institutional environments.”

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Stablecoin Adoption Accelerates, Even Amid Central Bank Concerns

“Stablecoin adoption is accelerating because startups and traditional financial institutions have been building toward this moment for more than a decade. Banks and financial institutions have spent years educating themselves, running proofs of concept, and experimenting with blockchain-based financial products.”

“The rise of stablecoins was the “aha moment” for many of these institutions. It demonstrated that blockchain infrastructure could solve real financial problems, particularly around settlement and cross-border payments.”

“Regardless of central bank concerns, financial institutions are now racing to understand how to position themselves within this technological shift. Many see stablecoins not as a niche crypto product but as part of a broader evolution of financial infrastructure and potentially as the foundation for the next phase of global financial expansion.”

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Do stablecoins strengthen or weaken monetary sovereignty?

Stablecoins are ultimately just a tool. Like many foundational technologies, whether they strengthen or weaken a nation’s position will depend on how governments choose to engage with them.

“Historically, countries that fail to participate in foundational technologies often weaken their strategic position over time. The same dynamic could apply to stablecoins.”

“If governments take the time to understand the technology and develop thoughtful regulatory frameworks, stablecoins could reinforce monetary sovereignty. If they ignore or attempt to suppress the technology without engaging with it, they risk ceding influence to other jurisdictions.”

“The most important step for governments today is to engage deeply with the technology itself.”

What policymakers risk if regulation focuses only on restricting stablecoins rather than integrating them?

“The biggest risk is simply falling behind. Stablecoin infrastructure, like the internet, is fundamentally borderless. Restricting it domestically does not stop innovation. It primarily limits access for people and businesses within that jurisdiction.

“We’ve seen similar patterns throughout technological history. Countries that heavily restricted early internet adoption often slowed their own innovation and economic development.”

“That doesn’t mean regulation should disappear. Financial systems without oversight can also introduce serious risks.”

But policymakers should focus on understanding the technology first. From there, the goal should be building regulatory frameworks that allow innovation to flourish while still managing legitimate risks.

How stablecoin infrastructure could reshape cross-border payments and global liquidity?

“Stablecoins are already reshaping cross-border payments by enabling faster, cheaper, and around-the-clock settlement. Large remittance companies like MoneyGram and Western Union are exploring stablecoin infrastructure to reduce operational costs while significantly improving the customer experience. Faster settlement and lower fees ultimately lead to better retention and growth.”

“But the impact goes beyond payments. Stablecoins also introduce a new form of global liquidity infrastructure. Because they settle on blockchain networks, value can move instantly across borders without relying on traditional banking hours or correspondent banking systems.”

“Right now, there are competing visions for how this infrastructure will evolve.”

“One model, sometimes described as a “stablecoin sandwich,” uses stablecoins as the settlement layer while both the sender and receiver remain on traditional financial rails. Another approach suggests a deeper transition, where more of the financial stack moves directly onto blockchain-based systems.”

Over the next three to five years, we’ll likely see strong network effects emerge around different models. Interoperability between blockchains and financial systems will likely be one of the most important factors determining which infrastructure ultimately becomes dominant.”

ECB Working Paper #3199 reveals central banks’ quiet panic: “stablecoins drain cheap retail deposits, lock banks into volatile wholesale funding, slash real-economy lending, and weaken their precious monetary policy transmission. USD ones risk importing foreign shocks, eroding… pic.twitter.com/Ea6fsUn1E2

— J. P. Mayall (@jpmayall) March 4, 2026