The main risk is posed by a possible investor run since the two largest stablecoins rank among the largest holders of U.S. Treasury bills and have asset reserves that are comparable to the top 20 largest money market funds. Such runs could also impact the euro zone if a European Union entity and a third-country entity jointly issue a fungible stablecoin, since EU regulations are tighter and investors are more likely to pick it for redemption.
"Significant growth in stablecoins could cause retail deposit outflows, diminishing an important source of funding for banks and leaving them with more volatile funding overall," the ECB said.
