ECB raises rates to 2.5% as euro stablecoins stay locked at zero yield

The European Central Bank raised its deposit facility rate by 25 basis points to 2.50% on Thursday, its second hike since June, as the energy shock from the Middle East conflict continues to push eurozone inflation above target. For holders of euro-denominated stablecoins, however, the widening gap between policy rates and their returns remains fixed at zero.euronews+1

A Rate Hike Driven by Energy Prices

The ECB's Governing Council lifted all three key rates — the deposit facility to 2.50%, the main refinancing rate to 2.65%, and the marginal lending facility to 2.90% — effective September 16. The move was widely anticipated: all 65 economists in a Reuters poll predicted the quarter-point increase.reuters+1

ECB President Christine Lagarde cited persistent inflation driven by rising energy costs tied to the Iran conflict. The bank now expects headline inflation of 3.0% this year, 2.5% in 2027, and 2.1% in 2028. "Inflation is set to remain well above target for an extended period," the ECB said in its statement. Reuters reported that policymakers view 2.5% as the upper end of the "neutral" rate range.ecb.europa+2

The Stablecoin Yield Gap

Under the EU's Markets in Crypto-Assets Regulation, holders of euro stablecoins such as Circle's ↘ 3.95% EURC earn nothing on their tokens — regardless of where the ECB sets rates. Article 50 of MiCA explicitly prohibits both issuers and crypto-asset service providers from granting interest on e-money tokens. The definition is deliberately broad, covering "any remuneration or any other benefit related to the length of time during which a holder" keeps the token, including discounts or compensation from third parties.springlex+1

Issuers, meanwhile, can earn yield on the reserves backing their tokens. MiCA requires at least 30% of reserves to sit in bank deposits, with the remainder in secure, liquid, low-risk assets. Circle has operated EURC under a French e-money licence since July 2024, and the token's market capitalization now sits at roughly $466 million.mitrade

A Structural Tension

The interest ban predates this hiking cycle. When MiCA's stablecoin provisions took effect in June 2024, the ECB deposit rate stood at 3.75%. After eight cuts brought the rate to 2.00%, two hikes this year have pushed it back to 2.50%. Throughout, the permitted yield for euro stablecoin holders has remained at zero.global.morningstar

The prohibition reflects a deliberate policy choice to prevent stablecoins from competing with bank deposits or money market funds as savings instruments. The ECB said Thursday it is "not pre-committing to a particular rate path". For euro stablecoin holders, the path of their yield is already decided.ecb.europa+1