The European Central Bank (ECB) has identified euro-based stablecoins as potential drivers of demand for European Union sovereign bonds. In its latest report, the ECB compared the potential impact of euro-denominated stablecoins to the influence of USD-based stablecoins on U.S. Treasury bills. The market supply of euro-based stablecoins has surged to $701 million, nearly tripling from $250 million in early 2023. The ECB noted that the growth of euro-based stablecoins could significantly affect regional bond markets, contingent on the reserve asset composition of stablecoin issuers and their liquidity management strategies. Circle's Euro-based stablecoin, EURC, has seen a notable increase in peer-to-peer transfers, reaching $2.3 billion in March, marking a 33% month-on-month rise. Despite the potential benefits, the ECB cautioned about the risks stablecoins pose to the traditional financial system without adequate regulatory measures.