Three CEPR academics have floated proposals to address the risks of a stablecoin run for dollar tokens that are issued via multiple jurisdictions. Rather than trying to restrict who can redeem stablecoins in Europe, they suggest that the EU redemption rules should mirror US rules, imposing redemption delays and fees in a crisis. The logic is if you can’t beat them, join them. As long as Europe offers the fastest and safest exit, a global run on a dollar stablecoin will head for the EU issuer, draining its reserves.
Multi-issuance is how USDC already works. Circle issues the token in the United States and separately through its French entity under MiCA, with reserves split between each jurisdiction. MiCA gives holders the right to redeem at par, at any time, without fees. Current draft OCC rules for implementing the GENIUS Act allow a two business day delay, extendable to seven days if redemptions exceed 10% of issuance in a day, with fees on top. Because the tokens are fungible, a holder anywhere can route redemptions to the EU entity, whose reserves cover only European issuance.
The European Commission’s May consultation floated restricting redemptions to EU holders, dedicated liquidity buffers and cross border reserve transfers. The CEPR academics, Edoardo Martino, Eric Monnet and Enrico Perotti, argue the Commission’s proposed tools will not work. A residency check is defeated by selling the token to an eligible holder. Buffers add capacity but leave the incentive to run intact. And reserves are least mobile when they are most needed, because US authorities may ring fence dollars in a crisis. Despite calls for a ban on multi-issuance by the ESRB, in July, Parliament backed keeping multi-issuance with safeguards.
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