ECB Warns Stablecoins Could Erode Bank Deposit Base as It Pushes Digital Euro

The European Central Bank warned that the spread of stablecoins could erode commercial banks’ deposit base.

Piero Cipollone, a member of the ECB’s Executive Board, made the remarks in a July 17 speech to Italy’s federation of cooperative credit banks, Cointelegraph reported. Digital payments are reshaping the financial system, he said, while Europe is becoming increasingly dependent on non-European payment infrastructure.

Banks are already losing payment fees and transaction data to mobile payment providers, Cipollone said. As stablecoin adoption expands, commercial banks’ retail deposit base could be further undermined. A digital euro would preserve the role of public money while ensuring banks can continue to participate in the payments ecosystem and retain customer demand, he added. The digital euro is a central bank digital currency, or CBDC, that the ECB is developing.

Earlier this month, the ECB selected 36 payment service providers, including banks and fintech firms, to take part in a digital euro pilot program set to begin in the second half of next year. The project aims to test how the digital euro would operate across the euro area before a final decision on issuance.

The ECB has previously said it could decide as early as 2029 whether to issue the digital euro.