European Central Bank warns: Stablecoin adoption could erode bank deposit base, accelerating the push for a digital euro

Odaily reports that Piero Cipollone, a member of the Executive Board of the European Central Bank (ECB), stated that the widespread adoption of stablecoins could weaken commercial banks' retail deposit base and alter the competitive landscape of the traditional banking system.

Speaking on Friday at the Italian Banking Cooperative Association in Rome, 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 rise of mobile payment service providers. As digital asset payment tools like stablecoins become more widespread, commercial banks may face additional pressure from deposit outflows.

Cipollone emphasized that a digital euro would help maintain the role of public money and ensure banks continue to participate in the payment ecosystem, while also meeting the evolving financial needs of customers.

"A digital euro can both preserve the function of public funds and ensure banks retain a significant 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 firms. 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 euro area.

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