Lagarde Sees Euro-Stablecoin Risks for Banking, Monetary Policy

European Central Bank President Christine Lagarde said that even euro-denominated stablecoins would create risks to financial stability and monetary-policy transmission, questioning the case for introducing such instruments.

While they could lower financing costs in the euro area and boost the common currency’s global pull, there are “significant” trade-offs, Lagarde said Friday in a speech.

“They outweigh the short-term gains in financing conditions and international reach that euro-denominated stablecoins might provide,” she said. “If we want to strengthen the international appeal of the euro, stablecoins are not an efficient way of doing so.”

Stablecoins, which are mostly pegged to the US ...