ECB Warns Stablecoins Could Drain Bank Deposits – Here’s What It Means

European banks are losing the battle for slow payments. First came mobile apps, which took their payments and data, then digital payments and startups took over. Now the ECB is warning that stablecoins may take away something that hurts them the most: their deposits.

Piero Cipollone, a member of the executive committee at the European Central Bank, made the announcement message Friday at the bank meeting in Rome, and he planned digital euro as a structural solution.

“Even credit card payments are becoming very low. In fact, mobile payments are on the rise and already exceed one in ten sales in Ireland, the Netherlands and Finland,” he said.

“When their customers use mobile payments, banks often charge more than those connected to a credit card and often do not receive any information about the payment, thus losing fees and data,” said Cipollone. “If the use of stablecoins increases in the future, banks will also lose retail deposits.”

They speak to Italian bank executives who have their own reasons for fear: Half of Italian bank branches operate in towns with fewer than 10,000 people, where the loss of payment data could disrupt the local lending business.

Stablecoins add a new dimension to the problem. They are privately issued crypto tokens pegged 1:1 to fiat currency—almost always the dollar—which allows users to hold and move money outside of banks. Think of them as a digital dollar that you keep in an app and not in a bank account. Even fintechs like PayPal, Stripe, and others rely on traditional banking methods in some way.

The global stablecoin market is about $300 billion, at Define dataand almost all dollar amounts.

Cipollone worries that the mass adoption of stablecoins could make deposits ineffective. Mobile payments cost banking and data; stablecoins can cost them the money they rely on to make loans.

Deposits are not just a number on the books. They are investment banks used to extend loans to businesses and home buyers. Fewer deposits mean fewer loans – and for small banks with limited margins and local customers, that’s an existential problem, not a leafy one.

What the ECB wants to develop is, ironically, the digital euro: a government-issued, electronic currency that is distributed – not in place of commercial banks. Under the current structure, banks maintain customer accounts, receive currency transfers, and store transaction data. The ECB has already named 36 payment providers – including Deutsche Bank, UniCredit, and Revolut – for a 12-month pilot from the second half of 2027.

The obvious objection is that a risk-free, government-backed digital wallet can drain deposits like a stablecoin. The ECB has safeguards: the digital euro does not pay interest, removing the incentive to park large sums of money in it, and keeping a limit limits the amount of money anyone can keep in a digital euro account. The bank’s financial analysis confirmed that the structure does not have a banking risk.

The critics were not convinced enough, and the ECB is being repeated stablecoin warnings they didn’t slow down the market visibly. But the legislative machinery is now in motion.

Per Cipollone, negotiations for a digital euro have already been approved on July 9, with the first phase taking place four days later. Lawmakers are looking for an agreement by the end of 2026. The first release is targeted for 2029.