ECB warns that stablecoin adoption could erode banks' deposit base, accelerating digital euro development

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 Federation in Rome, Cipollone pointed out that digital payments are reshaping the banking industry while simultaneously increasing Europe's reliance on non-European payment infrastructure. Banks are already facing declining payment service 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 prevalent, commercial banks may face greater pressure from deposit outflows.

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

"The digital euro can both preserve the role of public money and ensure that banks maintain an important role in the payment system," Cipollone said.

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

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