Isabel Schnabel: From money market funds to stablecoins - lessons for central banks
Speech by Ms Isabel Schnabel, Member of the Executive Board of the European Central Bank, at the 2026 Bank of Korea International Conference "Central banks and the future of money", Seoul, 1 June 2026.
Slides accompanying the speech
The nature of money has never been static. Over the centuries, financial innovation has reshaped how money is created, transferred and stored, often enhancing efficiency, broadening access and boosting economic welfare.
When such innovations reach scale, they alter the structure of the financial system, with consequences for financial stability, monetary policy and the international monetary order.
One recent innovation has been stablecoins. These are privately issued digital tokens pegged to fiat currencies and typically backed by portfolios of traditional assets. Their rapid rise has raised questions about their benefits and challenges.
To understand the unfolding changes, it is worth looking at how earlier innovations transformed financial markets.
Hyun Song Shin and his co-authors were among the first to examine these issues through a historical lens, drawing parallels with earlier monetary innovations, namely the "bank money" issued by the Bank of Amsterdam, which can be seen as an early form of stablecoin.[1]
Backed by high-quality assets and providing a stable unit of account, bank money offered a trusted means of settlement and went on to become a key international currency for more than a century.
Its eventual decline, however, illustrates how such trust can dissipate once confidence in the underlying assets weakens, even if the money is issued by a public deposit bank.