ECB warns stablecoin growth could weaken banks’ deposit base

European Central Bank Executive Board member Piero Cipollone warned that the spread of stablecoins could weaken commercial banks’ retail deposit base and alter competition in the traditional banking system. As digital payments expand, banks are already facing lower payment-fee income and greater exposure of transaction data, and Cipollone said broader use of stablecoins and other digital-asset payment tools could further increase pressure from deposit outflows. Cipollone also added that Europe’s payment infrastructure is becoming more dependent on non-European companies. Cipollone stressed that a digital euro would help preserve the role of public money and support banks in maintaining a central role in the payments ecosystem. The ECB recently selected 36 institutions, including banks, fintech firms and payment companies, to participate in its digital euro pilot program, which is scheduled to begin in the second half of 2027. The ECB has previously said it could officially introduce the digital euro in 2029 if related legislation and testing proceed smoothly.