ECB warns: Stablecoin adoption could erode bank deposit base, accelerating digital euro push

Odaily Planet Daily News The European Central Bank (ECB) Executive Board member Piero Cipollone stated that the large-scale adoption of stablecoins could weaken commercial banks' retail deposit base and alter the competitive landscape of the traditional banking system.

Speaking at the Italian Cooperative Banking Federation in Rome on Friday, Cipollone pointed out that digital payments are reshaping the banking industry while increasing Europe's reliance on non-European payment infrastructure. Banks are already facing declining payment fee income and loss of transaction data due to the development of mobile payment service providers. As payment tools based on digital assets like stablecoins become more widespread, commercial banks may face greater pressure from deposit outflows.

Cipollone emphasized that the digital euro will help maintain the status of public money and ensure banks continue to participate in the payment ecosystem while meeting customers' evolving financial needs.

"The digital euro can both preserve the role of public funds and ensure that banks retain an important role in the payment system," Cipollone said.

On Tuesday this week, the ECB selected 36 payment service providers to participate in a 12-month pilot project for the digital euro. Participants include banks, fintech companies, and payment enterprises. The pilot, scheduled to launch in the second half of 2027, aims to test the feasibility of operating a retail central bank digital currency (CBDC) in the eurozone.

The ECB previously stated that if relevant legislation and testing proceed smoothly, the digital euro could be officially launched as early as 2029. (Cointelegraph)