Stablecoins – a form of tokenised money issued primarily by non-banks – promise efficiency gains in payments but also bring new risks to financial stability and monetary control. Because of this, European Union policymakers have so far discouraged the development of stablecoins, instead favouring tokenised deposits issued by banks. This approach might well make sense in a one-jurisdiction world, but risks being counterproductive in the context of dollar-denominated stablecoins encouraged by the United States authorities. EU policy could push European demand for stablecoins outside the EU’s regulatory perimeter, ... (full story)