Isabel Schnabel 🇪🇺🇺🇦 (@Isabel

Isabel Schnabel 🇪🇺🇺🇦

6,922 posts

Isabel Schnabel 🇪🇺🇺🇦

@Isabel_Schnabel

Executive Board of the European Central Bank, University of Bonn (on leave), #NieWiederIstJetzt

Frankfurt, Germany

Joined November 2013

Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
The full speech and slides can as usual be found on our website.
European Central Bank
@ecb
Jun 1
Stablecoins offer benefits but also pose risks to financial stability, monetary policy and the international monetary order, says @Isabel_Schnabel. Central banks must keep pace with innovation to preserve the anchoring role of central bank money in future.
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
Under projects Pontes and Appia, the Eurosystem will provide a wholesale CBDC to provide a safe, trusted and scalable public settlement asset, ensuring that central bank money remains the anchor in a tokenised financial system, while allowing private innovation to thrive. 18/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
A digital euro preserves citizens’ access to public money, strengthens European strategic autonomy and provides a pan-European payment solution, reducing fragmentation. It is an indispensable step to maintain European sovereignty and provides benefits to all stakeholders. 17/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
The digital euro is partly a response to the changing payment landscape. Cash use in shops is declining while card and mobile payments are expanding rapidly, and a large and increasing percentage of card transactions are processed through non-European providers. 16/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
This is exactly the strategy the ECB has chosen: providing a public settlement asset – both retail and wholesale – that complements and enables private assets like tokenised deposits and stablecoins. 15/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
However, many advantages of stablecoins arise from their technology. Hence, the appropriate strategic response of the Eurosystem lies in the continued digitalisation and technological development of the monetary and payment infrastructure. 14/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
USD stablecoins may cement the international dominance of the dollar. Large USD stablecoin issuance could amplify the international transmission of US monetary policy, intensifying currency substitution and endangering monetary sovereignty in some countries. 13/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
Stablecoins may also reinforce the global role of the dollar, similar to money market funds. In global funding markets the share of the US dollar has held up well, unlike with foreign exchange reserves where the dollar has gradually lost some ground. 12/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
At the same time, greater reliance on wholesale funding would strengthen transmission as wholesale funding costs reprice more rapidly and more strongly. If stablecoins are adopted primarily as a payment instrument, this effect is likely to dominate. 11/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
For unremunerated stablecoins, higher policy rates would increase the opportunity costs of holding them, leading to outflows when monetary policy tightens. This could dampen monetary policy transmission. 10/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
In the recent tightening cycle, the United States experienced substantial deposit outflows from banks into money market funds. The same was not observed in the euro area. 9/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
Stablecoins also affect monetary policy. Their broad-based adoption would raise banks’ funding costs but would also create an additional demand for government securities. In relative terms, bank lending conditions are likely to tighten relative to market conditions. 8/18
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Isabel Schnabel 🇪🇺🇺🇦
@Isabel_Schnabel
Jun 3
Replying to @Isabel_Schnabel
How runs play out will depend on the reserve assets. Stablecoins backed by sovereign bonds could imply spillovers to sovereign debt markets, while stablecoins backed by bank deposits, as required by MiCAR, could amplify financial contagion between stablecoins and banks. 7/18
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