Europe’s financial risk regulator wants stronger regulations governing “multi-issuer” stablecoins. European Systemic Risk Board (ESRB) said there should be stricter guidelines covering these coins, which are issued partly in the European Union and partly in other jurisdictions. “[T]he general board stressed that third country multi-issuer schemes—with fungible stablecoins issued both in the EU and outside—have built-in vulnerabilities which require an urgent policy response. Members also took note that multi-function groups may operate under regulatory regimes which are much more lenient than for financial conglomerates, raising the question of divergent prudential standards.” The ESRB met last week and passed a recommendation to prohibit “multi-issuance” stablecoins. The board’s guidance is not legally binding but will pressure governments in the EU to impose the limits or explain how their countries can still preserve financial stability without them. Stablecoins are pegged to assets such as the U.S. dollar and typically rely on a one-to-one reserve of traditional funds to back their value. With the multi-issuance model, licensed stablecoin providers issuing coins in the EU need to maintain a local reserve in at least one member state while still issuing and managing reserves for functionally identical coins in other parts of the world. Waller said the private sector is better positioned to innovate than central banks, and that stablecoins offer an attractive way for people in countries beyond the United States to access dollar banking services.