Frankfurt (Reuters) – European Union (EU) legislators should require solid equivalence guarantees and regimes on the part of stable -co -cob issuers in order to prevent the risk of underlying assets of European stablecoins, said Christine Lagarde, president of the Central Bank (ECB) on Wednesday.

The EU has implemented one of the strictest regimes in the world for cryptocurrencies by demanding that stablecoins, which are backed by an asset that can be a currency, be fully guaranteed by reserves kept in European banks.

Christine Lagarde said that European legislators should demand that stable -co -emitters outside EU have the same normative requirements as European stable emitters.

“European legislation should ensure that these systems cannot operate in the EU unless they be supported by solid equivalence plans in other jurisdictions and by guarantees relating to the transfer of assets between the EU and non-European entities,” she said at a conference on regulations.

“This also shows why international cooperation is essential,” she added, evoking the need for “equitable game rules worldwide”.

According to the monetary policy manager, the EU regulation on cryptoactives (Mica) allows stable andcoin holders emitted both in the EU and outside the EU to liquidate them wherever they want.

Thus, stablecoin holders should logically choose the EU to liquidate them because of its stricter standards in terms of reserves which could ultimately prove to be too low in the presence of a banking panic.

“In the event of a rush, investors would naturally prefer to buy back their titles in the jurisdiction which offers the strongest guarantees, that is to say probably the EU, where the Mica regulation also prohibits the buyout commissions,” said Christine Lagarde, adding that “the reserves held in the EU may not be sufficient to meet such concentrated demand”.

(Written by Francesco Canepa; Bertrand de Meyer, edited by Blandine Hénault)

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