ECB warns stablecoins could drain bank retail deposits

European Central Bank Executive Board member Piero Cipollone warned in Rome on Friday that wider stablecoin adoption could erode commercial banks’ retail deposit base.

Speaking to Italy’s Federation of Cooperative Credit Banks, Cipollone argued that digital payments are reshaping banking and increasing Europe’s reliance on non-European payment infrastructure. He noted banks are already losing payment fees and transaction data to mobile payment providers.

Cipollone urged a public solution to preserve the role of banks and public money in payments and pointed to a central bank digital currency as an option. “The digital euro would both preserve the role of public money and ensure banks remain involved in the payments ecosystem while continuing to meet their customers’ needs,” he said.

On Tuesday the ECB selected 36 payment service providers, including banks, fintech firms and payment companies, for a 12-month digital euro pilot scheduled to start in the second half of 2027. The pilot will test how a retail central bank digital currency could operate across the euro area before any decision on issuance.

The ECB has said a final decision on issuance could come as early as 2029. The pilot will cover different national markets, distribution models and participant types and involve a mix of incumbents and newer market entrants.

Cipollone linked the pilot and the broader digital euro work to market structure concerns. He warned that moving transaction processing and customer data to non-bank platforms reduces payments-related income streams and the information banks rely on, and that without a public option retail deposits could shift toward private stablecoins and payment platforms.

The digital euro project remains in an experimental phase as regulators and market participants prepare tests of technology and governance before any issuance decision is made.