The European Banking Authority (EBA) has proposed new guidelines for stablecoin issuers in the European Union (EU). The aim of these guidelines is to ensure that stablecoins can be quickly redeemed, even in turbulent market conditions, to prevent bank runs and contagion during a crisis. Under the proposed rules, stablecoin issuers must offer fully redeemable stablecoins backed by a currency. The EBA believes that these liquidity guidelines will act as a stress test for stablecoin issuers, highlighting any shortcomings in liquidity. If approved, the guidelines will come into effect from June next year. The EBA will have the power to strengthen liquidity requirements based on the outcome of the stress testing. The proposed rules are designed to ensure that stablecoin issuers meet the same safeguards as banks and do not have unfair advantages in terms of capital or liquidity. The proposal is currently in the consultation phase, allowing the public to provide input before a public hearing is scheduled for January 30, 2024.

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Information	Details
Geography	Europe
Countries
Sentiment	neutral
Relevance Score	1
People	None
Companies	European Banking Authority (EBA)
Currencies	None
Securities	None