ContextWelcome remarks by Joachim Nagel, President of the Deutsche Bundesbank, at the International Conference on Payments and Securities Settlement, hosted by the Deutsche Bundesbank and the Bank of Canada, Eltville am Rhein, 18 June 2026.
Why it mattersExplains in plain terms how interest-bearing stablecoins could change the way central bank rate decisions reach households and firms.
- Stablecoins and new forms of money could change how monetary policy works.
- Interest-bearing stablecoins would affect bank deposits.
- The deposit channel of policy may weaken.
- Factor new forms of money into monetary policy decisions.
- Recalibrate policy instruments as needed.
- Require stablecoins to hold a large share of reserves as bank deposits.
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1. Why new forms of money matter for policy
Opening a payments and settlement conference co-hosted with the Bank of Canada, Bundesbank President Joachim Nagel noted that payment systems are part of the monetary system, which rests on central bank money and private money. Three new forms are emerging: retail central bank digital currency, such as the digital euro, planned for 2029; stablecoins, almost all dollar-based; and tokenised deposits, still mainly in wholesale settings. Their footprint is small today, so impact on monetary policy transmission is limited, but it could grow, which is why analysis starts now.
2. Effects through the banking sector
He focused on the bank lending channel, where monetary policy works through banks' funding and willingness to lend. Tokenised deposits barely change the nature of bank deposits, so effects should be limited. A digital euro could in principle draw deposits away from banks, but the holding limit and the absence of interest, which keeps it a means of payment rather than savings, will contain this. Stablecoins are harder: a euro-area shift to foreign-currency coins looks very unlikely given the euro's credibility, while euro stablecoins depend on reserves and funding sources. Under the crypto-asset regulation, issuers must hold a large share of reserves as bank deposits; deposits would shift from many stable private holders to fewer, more mobile institutional ones paid near market rates and concentrated in larger banks. Buying government bonds from banks would shrink balance sheets, while substituting for cash could lengthen them.
3. Conclusions
Effects run mainly through banks' size, deposit mix and funding costs, and differ by instrument: small for tokenised deposits, larger but contained for a digital euro, complex for stablecoins. In most scenarios transmission through banks could get stronger as deposits become more mobile and banks compete for funding, except where stablecoins replace cash. In the long run, shrinking bank lending could move credit elsewhere and weaken the traditional channel while strengthening the asset-price channel, so the net effect is undetermined. None of this removes the ability to deliver price stability; it means the new forms of money must be factored into decisions. Quoting Heine's Loreley, he urged central banks to keep their eyes open and steer with care.