Stablecoins Could Drain Bank Deposits, ECB Turns to Digital Euro

Stablecoin growth could erode bank retail deposits

Piero Cipollone, an Executive Board member of the European Central Bank (ECB), warned that wider stablecoin adoption could shrink the retail deposits that commercial banks rely on. Speaking in Rome on 17 July 2026, he addressed the Federation of Italian Cooperative Credit Banks. He said stablecoins compete directly with money held in bank accounts, and that growth in their use would cost banks part of their deposit base. "If the use of stablecoins increases in the future, banks will also lose retail deposits," Cipollone said. Those deposits are a core funding source that banks use to support lending across the euro area.

Banks lose payment fees and customer data

Cipollone said banks already cede ground in day-to-day payments. When customers pay through mobile applications, banks "typically pay higher fees" and "often do not receive any information about the payment, so they lose both fees and data," he said. He added that two-thirds of card payments in the euro area now run on non-European schemes, and that this share keeps rising. That reliance, he argued, weakens Europe's control over its own payment infrastructure.

The digital euro would keep banks in payments

Cipollone framed the digital euro as a tool that protects banks rather than displacing them. He said a public digital currency would let commercial lenders stay at the centre of payments while private stablecoin issuers expand.

"The digital euro would both preserve the role of public money and ensure banks remain involved in the payments ecosystem", 17 July 2026. — Piero Cipollone, Executive Board member, European Central Bank

ECB selects 36 providers for digital euro pilot

The speech followed a concrete step. On 14 July 2026 the ECB selected 36 payment providers from more than 50 applicants to join a digital euro pilot. The test will run for 12 months from the second half of 2027, across the ECB and 19 national central banks. The roster spans large lenders and fintech firms, including Deutsche Bank, UniCredit, Revolut, Stripe and Adyen, alongside smaller players such as Italy's Poste Italiane and Satispay. Participants plan to trial person-to-person and person-to-business payments, both online and offline, before any decision on issuing the currency.

Stablecoin balances show the scale of the shift

The competition Cipollone described is measurable. USDC, one of the largest dollar stablecoins, traded at $1.00 with a market capitalisation near $73.2 billion and 24-hour trading volume above $12 billion (CoinPaprika, 17 July 2026). Balances of that size sit outside the traditional deposit system that banks use to fund lending.

A digital euro decision could come by 2029

The ECB has not decided to issue a digital euro. Cipollone said a decision could come as early as 2029, though the timeline depends on European legislation still under debate. Until then, the pilot is meant to test how a public digital currency would work alongside private payment providers.

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