The European Central Bank published a notable paper on stablecoin fungibility. This is not related to the debate around fungibility of EU versus foreign stablecoins, where the EU’s comparatively generous redemption rules are causing concerns that a run on a US stablecoin could encourage foreigners to redeem from the EU version of the same stablecoin. Instead, the paper explores a broad definition of fungibility. While the exercise may seem academic, fungibility and utility are closely related. The authors focus on stablecoins, but note that the framework outlined also applies to retail CBDCs. They don’t mention deposit tokens, but clearly it applies to that use case as well. The conclusion is that collateral-backed stablecoins are a fungible form of payment, provided they satisfy the key elements in the framework: settlement finality, interoperability with other forms of payment, and (ultimately) convertibility into central bank money. In order to do so, it is essential that regulated stablecoins have sufficient high quality collateral, liquidity and a capital buffer. The most complex and interesting part of the paper is on interoperability, with blockchain interoperability comprising a minor part of the assessment.