Europe's central banks have it right, in my view: a mandated bank deposit is the weakest part of a stablecoin reserve. The ESCB's response to the MiCA review, published this month, asks Brussels to remove that floor. Article 54 of MiCA requires "at least 30 % of the funds received" to sit with credit institutions, and the EBA's 2024 draft rules lift it to 60% for significant tokens. 1. We have already watched this fail. In March 2023 @circle said $3.3B of USDC reserves, "about 8% of the USDC total reserve," was held at Silicon Valley Bank. That cash was meant to be the safest slice of the pool, and in the ESCB's own account it is what set off a run on USDC. 2. The link runs both ways. The ESCB writes that a stablecoin run "could trigger a run on an exposed bank," and it is candid that its own fix moves some stress into sovereign bills instead. Bills can still be sold on a bad day. A deposit inside a failed bank waits on the resolution. 3. The replacement is already on paper. The EBA's draft liquidity rules want 40% of a significant token's reserve maturing within one working day, and the ESCB would keep those buckets while dropping the deposit share. The EBA sees it differently, as a redemption tool, and wrote that prompt redemption "is key to protect holders' rights." Overnight reverse repo can meet that clock too. 4. The size makes it cheap to fix now. EURC, Circle's $EURC, had about 405 million tokens circulating on CoinGecko on 24 September. Reserve design settled at this scale shapes whatever gets built on top. Consultation closes Wednesday, 30 September. Will be reading how the bank responses land on this one 🏦