The European Central Bank is warning that stablecoins could hit banks where it matters most: deposits. Speaking at a banking conference in Rome on Friday, ECB Executive Board member Piero Cipollone said lenders have already been losing fees and payment data to mobile apps and digital payment services, and that a wider shift toward stablecoins could also strip away retail deposits.
ECB links stablecoins to a new threat for banks
Cipollone cast the digital euro as the structural response to that pressure. “Even traditional debit card payments are becoming less popular. In fact, mobile payments are on the rise and they already exceed one in ten point-of-sale transactions in Ireland, the Netherlands and Finland,” he said.
He added: “When their customers use mobile payments, banks typically pay higher fees than those associated with debit cards and often do not receive any information about the payment, so they lose both fees and data. If the use of stablecoins increases in the future, banks will also lose retail deposits.”
His audience included executives from Italian cooperative banks, which face a more localized version of that problem. The report noted that half of Italy's cooperative bank branches serve towns with fewer than 10,000 people, where the loss of payment data could hollow out local lending activity.
Why the ECB sees stablecoins as more than a payments issue
Stablecoins add another layer because they let users hold and move money outside the banking system. The tokens are privately issued and pegged 1:1 to a fiat currency, almost always the U.S. dollar. The article contrasted that model with fintech firms such as PayPal and Stripe, which still depend on the traditional banking system in one way or another.
According to DeFiLlama, the global stablecoin market is worth roughly $300 billion, and almost all of it is dollar-denominated.
Cipollone's concern is that mass adoption of stablecoins could make cash deposits less relevant. Mobile payments cost banks fees and data. Stablecoins, in his view, could weaken the deposit base that banks rely on to extend credit.
Deposits are not just accounting entries for lenders. They are the funding base used to make loans to businesses and homebuyers. If deposits shrink, lending capacity shrinks with them. For smaller cooperative banks with thin margins and local customer franchises, that is a direct business problem.
Digital euro proposed as the ECB's answer
The ECB's answer is a digital euro, described as a government-issued electronic form of cash distributed through commercial banks rather than around them. Under the current design, banks would continue to hold customer accounts, earn interchange fees, and retain transaction data.
The central bank has already selected 36 payment providers for a 12-month pilot set to begin in the second half of 2027. Participants named in the report include Deutsche Bank, UniCredit, and Revolut.
Questions remain over deposit flight risk
The most obvious challenge to the plan is whether a risk-free, government-backed digital wallet could drain deposits just as a stablecoin might. The ECB says it has guardrails in place. The digital euro would pay no interest, removing an incentive to park large balances there, and holding limits would cap how much any user could keep in a digital euro account.
The ECB's own financial stability analysis concluded that the design would pose no material risk to bank liquidity.
Critics, however, have not been fully persuaded, and the central bank's repeated warnings about stablecoins have not visibly slowed the market.
Negotiations are underway, with 2029 in view
Cipollone said negotiations on the digital euro are already underway after approval was granted on July 9, with the first session held four days later. Lawmakers are aiming to reach a deal by the end of 2026. First issuance is being eyed for 2029.