ECB’s Schnabel Warns Dollar-Pegged Stablecoins Could Entrench Greenback Dominance

The growing use of stablecoins largely tied to the U.S. dollar risks reinforcing the currency’s global dominance and weakening the euro’s international role, European Central Bank board member Isabel Schnabel said on June 1, 2026. Schnabel told a Bank of Korea conference in Seoul that network effects and first-mover advantages, not necessarily stronger economic fundamentals, could boost the dollar’s position. More than 90% of stablecoins are pegged to the dollar, and rapid issuance growth could slow or reverse a two-decade decline in the greenback’s global reserve share, which fell to below 57% last year from about 70% in 2000, according to IMF data. The trend could hit countries with weak monetary policy credibility hardest, potentially creating a vicious circle where dollar-based stablecoins erode central banks’ ability to transmit policy changes. Even for the euro area, persistent dollar stablecoin dominance might limit the euro’s role in tokenized finance and the international monetary system over time, Schnabel cautioned.