ECB Warns: Stablecoin Adoption Could Erode Bank Deposit Base, Accelerating Digital Euro Push

Odaily reported that Piero Cipollone, an Executive Board member of the European Central Bank (ECB), 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 on Friday at the Italian Cooperative Banking Federation in Rome, Cipollone noted that digital payments are reshaping the banking sector while increasing Europe's reliance on non-European payment infrastructures. Banks are already facing declining payment fee income and loss of transaction data due to the growth of mobile payment service providers. As digital asset payment tools like stablecoins become more widespread, commercial banks may face further pressure from deposit outflows.

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

"A digital euro can both safeguard the function of public funds and ensure that banks maintain an important role in the payment system," Cipollone stated.

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

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