ECB Warns Stablecoins May Drain Bank Deposits—Here's What That Means
The ECB says banks are losing control of payments in stages: first to mobile apps and digital payment firms, and potentially next to stablecoins, which could also drain retail deposits. Piero Cipollone argued that when customers use mobile payments, banks lose fees and payment data; widespread stablecoin use could further reduce deposits, weakening banks’ ability to lend, especially for small local cooperative banks in Italy. Stablecoins are privately issued crypto tokens, usually dollar-pegged, that let users hold money outside the banking system. The ECB sees the digital euro as the main response: a state-backed digital currency distributed through commercial banks, preserving bank accounts, fees, and transaction data. To limit deposit flight, the design includes no interest and caps on holdings. Legislative talks are underway, with a goal of agreement by end-2026 and possible issuance around 2029.
