The European Central Bank has warned that wider use of stablecoins could put additional pressure on commercial banks by weakening their retail deposit base. The warning came from ECB Executive Board member Piero Cipollone, who linked the shift to broader changes in digital payments and the structure of Europe’s financial system.
Pressure on banks’ role in payments
According to Cipollone, digital payments are reshaping finance in ways that are already affecting banks. He said Europe is becoming more reliant on payment infrastructure from outside the region, while banks are losing both payment-related fees and transaction data to mobile payment providers.
In that environment, the ECB sees stablecoins as a potential further challenge. As adoption expands, Cipollone said, commercial banks’ retail deposits could face additional erosion. That would add to concerns about how much control banks retain over customer relationships and payment activity as more transactions move through alternative digital channels.
Why the ECB is tying this to the digital euro
The ECB is using those concerns to reinforce the case for a digital euro, the central bank digital currency it is developing. Cipollone said a digital euro would help preserve the role of public money in an increasingly digital payments landscape.
He also argued that it could keep banks involved in the payments ecosystem rather than pushing them further to the margins. In the ECB’s view, that would help banks continue to capture customer demand even as payment habits evolve and new digital instruments gain ground.
Pilot plans move ahead
Work on the digital euro is continuing through a pilot phase. The ECB has selected 36 payment service providers to participate in a program scheduled to begin in the second half of next year.
The aim of the pilot is to test how a digital euro would function across the euro area before any final decision on whether to issue it. The ECB has said that an issuance decision could come as early as 2029, though that remains a future decision rather than a settled outcome.
A wider strategic concern for Europe
Cipollone’s comments place stablecoins within a broader strategic debate about European autonomy in payments. The ECB’s concern is not limited to deposits alone; it also extends to who controls payment rails, collects transaction data, and earns the fees generated by digital commerce.
By presenting the digital euro as both a public-money instrument and a way to keep banks engaged, the ECB is framing the project as a response to structural changes already underway in payments, as well as to the possible expansion of privately issued digital tokens.
The remarks underscore the central bank’s position that the growth of digital payment alternatives could reshape the balance between banks, technology providers, and public institutions in the euro area. For now, the next concrete step is the pilot with selected payment service providers, which is intended to show how a digital euro might work in practice before policymakers decide whether to move ahead with issuance.
Source: en.bloomingbit.io