The ECB warns: stablecoins threaten bank deposits — the digital euro as a response
The mass adoption of stablecoins could trigger a significant outflow of retail deposits from the banking system. This statement was made by Piero Cipollone, a member of the Executive Board of the European Central Bank (ECB), during a speech at the annual meeting of Federcasse, the Federation of Cooperative Credit Banks of Italy.
Cipollone emphasized that banks are already feeling pressure from mobile payment services, which are siphoning off fee income and control over payment data. "If the use of stablecoins increases in the future, banks will also lose retail deposits," he warned. This scenario threatens the traditional model of bank funding and liquidity.
As a response to the challenges of the digital age, Cipollone pointed to the digital euro — a CBDC (central bank digital currency) project. In his view, this is a tool that will preserve the role of public money in the digital payments sphere and prevent banks from being pushed out of the payment ecosystem. The key task is to create a sovereign European infrastructure. Currently, two-thirds of all card transactions in the EU are processed through non-European systems, and this share continues to grow. In 13 out of 21 eurozone countries, there is no national card scheme, and more than half of the states lack their own e-commerce solutions.
It is important to note that, according to the regulator's calculations, the introduction of a digital euro with strict holding limits and a zero interest rate should not pose a threat to banking liquidity or financial stability. Let me remind you that on July 14, the ECB already selected 36 banks and payment companies to participate in the pilot project. The operational testing phase will begin in the second half of 2027 and will last 12 months.
My analysis: The ECB's concerns are absolutely justified. The growing popularity of stablecoins, especially as a means of savings and settlements, directly undermines the deposit base of banks. In this context, the digital euro is not just a technological experiment but a strategic necessity for preserving the EU's monetary sovereignty. However, the project's success will depend not only on technical implementation but also on how convenient and confidential it proves to be for users compared to existing cryptocurrency and fiat solutions.