The European Central Bank (ECB) has expressed opposition to proposals for easing regulatory requirements on euro-denominated stablecoins. The ECB argues that expanding euro stablecoin issuance could reduce bank lending and complicate central bank interest rate control. This stance comes in response to suggestions from Brussels-based think tank Bruegel, which advocated for relaxing liquidity requirements for crypto issuers and potentially allowing them access to ECB financing to foster a local market less dominated by dollar stablecoins. ECB officials, including President Christine Lagarde, voiced concerns that stablecoin issuance might lead to bank deposit outflows, weakening banks' funding sources. Bruegel warned that if EU regulations are significantly stricter than those in the U.S., it could exacerbate the "digital dollarization" trend.