ECB’s document states that such stablecoin issuers should first meet the strict liquidity requirements on cash reserves, mirroring financial market funds. ECB further says that assessing the possible threats that stablecoins could bring up regarding the EU’s financial stability should fall within its very competent jurisdiction. It believes that there is no other entity to regulate better other than itself. Thus, explaining its desires to have the final say for any EU-based stablecoin launches.
Should the EU lawmakers grant ECB its desired veto powers, it would be evident for stablecoin issuers, such as the aforementioned Diem, to encounter further hurdles and overwhelming challenges even if it does secure approval from the regulators of Switzerland. Add to that the fact that Christine Lagarde, the current ECB President, is a crypto and stablecoin critic; such projects do indeed have a lot on their hands right now.
As it currently stands, the ECB is still in an active investigation regarding the plausible development of a European CBDC, the digital euro. Notably, the ECB aims to complete said project before 2026.