ECB Warns That Widespread Adoption of Stablecoins May Erode Bank Deposit Base

ECB Executive Board member Pier Carlo Padoan stated that the large-scale adoption of stablecoins could weaken the retail deposit base of commercial banks and alter the competitive landscape of the traditional banking system. Speaking at the Italian Banking Association in Rome, Padoan pointed out that digital payments are reshaping the banking industry and increasing Europe’s reliance on non-European payment infrastructures. Banks are facing declining income from payment fees and loss of transaction data due to the rise of mobile payment service providers, and the proliferation of digital payment tools like stablecoins may lead to increased pressure on deposit outflows. Padoan emphasized that the digital euro will help maintain the status of public money and ensure that banks continue to play a role in the payment ecosystem, meeting the evolving financial needs of customers. The ECB has selected 36 payment service providers to participate in a 12-month pilot project for the digital euro, including banks, fintech companies, and payment firms. This pilot program is set to launch in the second half of 2027, aiming to test the feasibility of retail central bank digital currency in the eurozone. If related legislation and testing progress smoothly, the digital euro could be officially issued as early as 2029.

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