The European Union (EU) is calling for stablecoin projects to comply with EU equivalent regulations abroad to minimize risks for the funds held in Europe. ECB head Christine Lagarde stressed that lawmakers should adapt current regulations to avoid risking European users’ funds.

At a recent conference, when referring to stablecoin companies operating in the EU and other jurisdictions, Lagarde stated:

European legislation must ensure that these schemes cannot operate in the EU unless they are underpinned by robust equivalence regimes in other jurisdictions and safeguards relating to the transfer of assets between EU and non-EU entities.

Europe has one of the most stringent regulatory frameworks regarding stablecoins. This has led market-leading projects, including Tether’s USDT, to be delisted from European exchanges for compliance reasons.

Nonetheless, Lagarde believes that even this regime is insufficient when companies operate in other latitudes with lax regulation. This is because the international financial system has a high degree of interconnection, meaning that a crisis in one market can create imbalances in others.

“This also highlights why international cooperation is indispensable. Without a level global playing field, risks will always seek the path of least resistance,” Lagarde assessed.

Lagarde holds a critical stance on stablecoins, noting that if they achieve mainstream acceptance, it would affect international economies. In July, she declared that the general adoption of stablecoins might lead to the privatization of money.

The ECB has promoted the digital euro, the EU’s central bank digital currency (CBDC), as a sovereign answer to stablecoins. In opposition, the U.S. government has promoted stablecoins as a means of extending the dollar hegemony internationally.

Read more: ECB President Christine Lagarde Warns Stablecoin Adoption Might Lead to ‘Privatization of Money’

Read more: Digital Euro Launch Awaits EU Legislative Approval, Says ECB Chief Lagarde

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