ECB official says stablecoins could pull deposits from European banks

The European Central Bank is warning that stablecoins could become a direct threat to European bank deposits, the everyday funding source banks use to make loans. For investors, the issue is bigger than crypto payments: it touches bank profitability, lending, and Europe’s push to build its own digital payment rails.

Piero Cipollone, a member of the ECB’s executive board, delivered the warning Friday at a banking conference in Rome. He described the digital euro as a structural response to a payments market where banks have already lost ground to mobile wallets, payment apps and non-European card networks.

Stablecoins are crypto tokens designed to hold a steady value against a traditional currency, usually one token for one dollar. If people hold more money in those tokens instead of bank accounts, banks can lose retail deposits, meaning money kept by households and small customers that helps fund lending.

Cipollone said mobile payments have already changed the economics for banks. According to the ECB official, mobile payments now account for more than one in ten point-of-sale transactions in Ireland, the Netherlands and Finland.

He said banks often pay more when customers use mobile payments than they do for debit card transactions, while also receiving less information about the payment. That means banks can lose both fee income and transaction data, which can help them understand customers and manage lending relationships.

“If the use of stablecoins increases in the future, banks will also lose retail deposits,” Cipollone said, according to remarks published by the ECB.

Europe’s payment gap

The ECB’s concern is also about control. Cipollone said two-thirds of card payments in the euro area are processed through non-European schemes. He also said 13 of the 21 eurozone countries do not have a national card scheme of their own.

That leaves European banks and policymakers relying heavily on outside payment networks for a core part of consumer finance. The ECB has been pushing the digital euro, a central-bank-issued digital version of euro money, as one way to give consumers and merchants a public European alternative for digital payments.

The pressure is especially clear for smaller lenders. Cipollone spoke to Italian cooperative bank executives, a group with close ties to local communities. According to his remarks, half of Italy’s cooperative bank branches serve towns with fewer than 10,000 residents. Losing payment data in those areas could weaken a business model built on local customer knowledge.

Stablecoins add another challenge

Mobile wallets and fintech platforms such as PayPal and Stripe still depend on the traditional banking system in some way. Stablecoins can let users hold and transfer value outside bank accounts, which is why the ECB sees them as a different kind of risk.

The global stablecoin market is about $300 billion, according to DefiLlama data cited in the remarks, and is overwhelmingly denominated in dollars. That dollar tilt adds another concern for European policymakers, since wider stablecoin use could increase reliance on dollar-based private money in digital payments.

The ECB’s digital euro project is moving ahead. The central bank named 36 payment service providers for a digital euro pilot scheduled to begin in the second half of 2027. The announcement came days after the European Parliament voted 416 to 169 to start formal legislative negotiations on the project.

For now, Cipollone’s message is a warning rather than a claim that deposits are already leaving banks at scale. The ECB’s argument is that the next phase of digital payments could hit banks in a more sensitive place than card fees: the customer balances that support their lending businesses.

This story draws on original reporting from Decrypt.