The European Central Bank wants to abolish the stablecoin reserve requirement

The European System of Central Banks (ESCB) has recently proposed to abolish the mandatory reserve ratio requirement in EU Markets Regulation crypto asset regarding which reserves must be allocated to bank overnight deposits. Under current rules, stablecoin issued by e-money institutions are required to hold at least 30% of their reserves with commercial banks and systemically important token is limited to 60%.

The same day was the consultation deadline for the central bank's systematic draft stablecoin operating guidelines. Its June policy has excluded commercial bank backing due to financial, operational and contagion risks, with plans to finalize the guideline by the end of 2026. The two sets of regulations cover different types of issuers and are implemented at different stages, but the recommendations point to a common concern: placing token reserves in banks could connect two sources of financial stress.

Reserves both protect token and expose banks

The MiCA's deposit requirement makes commercial banks part of a satisfactory redemption mechanism. Since the cash backing token simultaneously becomes issuer bank account opening funds, the ability to repay the holder is therefore linked to the bank's ability to return the money. This issue is two-sided. As explained by the European Central Bank in a speech in June, banking failures can undermine confidence in the quality and availability of reserves at stablecoin .

Suggested differences from United Kingdom model

The recommendations reported by Reuters would require a focus on short-term assets, and its approach to relaxing mandatory bank allocations differs from United Kingdom 's direct exclusion of commercial bank backing. A stable policy for the central bank allows up to 70% allocation in remaining maturities of no more than six months in short term government bonds, with 30% held in non-interest bearing central bank deposits. Qualified issuers that are identified as systemically important can hold up to 95% of government debt at an early stage.

There's a reason for the cash buffer.

The ECB's analysis of the sovereign bond market argues that significant stablecoin issuance by e-money institutions can satisfy redemption equivalent to 60% of supply through withdrawal of deposits, without having to sell sovereigns immediately. This benefit depends on whether the deposit is available. It still captures a tradeoff: avoiding commercial bank credit loopholes may force issuers to cash out securities when holders demand repayment. Even short-term securities may fluctuate in value or be difficult to redeem under pressure.