In remarks to a conference in Luxembourg, Coeure says global stablecoins are "the natural result of rapid technological progress, globalisation and shifting consumer preferences".

Notwithstanding the threats to financial stability and monetary sovereignty posed by private currencies, Coeure lifts the curtain on more disruptive forces created through the hypothetical formation of "digital currency areas", networks where payments and transactions are made digitally by using a currency specific to the network - be it a fiat currency or not.

At one extreme, cooperation would cut across continents and lay the ground for the rise of a truly global private digital currency, although Coeure stresses this would be a long way off. More conceivable are digital regional currency areas, arising from a journey that would be "long and full of perils" and ultimately entailing a risk of fragmentation of the international monetary system.

The potential for currency substitution would pose significant challenges to public authorities.

"The “stablecoinisation” would likely start in economies with stubbornly high inflation or weak institutions," theorises Coeure. "The decline in the prime legal tender would, in turn, undermine the effectiveness of monetary policy in these economies. But unlike 'traditional' currency substitution, 'stablecoinisation' would potentially relegate key policies that belong to the public sphere to private payment system providers - an outcome which citizens clearly cannot accept."

In facing up to the challenges, Coeure calls for closer central bank coordination to reap the benefits of recent technological advances more quickly and more efficiently.

"Much in this spirit, the ECB and the Bank of Japan have already joined forces to examine the possible use of distributed ledger technology in financial market infrastructures," he says. "The next natural step would be for global central banks to join forces and jointly investigate the feasibility of CBDCs based on common technical standards."