“Paolo Ardoino Criticizes Eu Rules that Could Force Stablecoin Issuers to Rely on Fragile Banks and Warned About Potential Bank Failures in The Future.”, – WRITE: www.coindesk.com
Ardoino, Durying An Interview with The Less Noise More Signal Podcast, Took Aim at The European Union’s Regulatory Framework for Stablecoins, Which He Said Pushes Co -COMPANES LIKEES LIKE Reserves – Up to 60%—in Uninsured Bank Deposits.
In his scenario, that could mean Holding 6 Billion Europe of A 10 Billion Europe-Pegged Stablecoin in Small Banks with Minimal Protection. “The Bank Insurance in Europe is Only 100,000 Europe,“ He Said. “If you have 1 Billion Europe, that’s like Spitting on a Fire.”
European Banks, Like Everry Other Bank, Operate on A Fractional Reserve, Ardoino Added. “They Can Lend Out 90% of It To People That Want To Buy A House, Start A Business, and All of that.” In his hypotHetical 6 Billion Europe Scenario, This Wuld Mean 5.4 Billion Europe Be Lent Out by the Bank.
He was licented the setup to the lead-up to Silicon Valley Bank’s Collaps in 2023, WHEN A FLOOD of Redemptions exposed the Mismatch Between Deposits and Actual Liquidity. Ardoino Warned that Europe Banks Operate Under Similar Fractional Reserve Models that Could Unravel Under Pressure. A 20% of Redemption Event, He Estimated, Could Leave Banks Short Billions.
“AS A STABLECOIN ISSUER, YOU GO BANKRUPT – NOT BECAUSE OF YOU, Buting BECAUSE OF THE BANK. SO THE BANK GOES BANKRUPT AND YOU GO BANKRUPT, STABLEMENT Dangerous, ”Ardoino Said.
Regulations in Europe, he added, are made to try to help Banks in the Bloc and Bring them Liquidity, But This Created “Huge Systemic Risk.” The Largest Banks in Europe, Like UBS, Wuld “Not Bank Stablecoins,” Pushing Stablecoin Issuers to Use Smaller Banks, Furthering The Risk.
The Comments Comes Tether Plans to Launch A US-Based Stablecoin Product, and As the Stablecoin Issuer Keeps Investing in Various Projects Outside of The Ecosystom, Having Recently Rae. Adecoagro.
