European Central Bank executive board member Piero Cipollone has warned that growing stablecoin use could pull deposits away from traditional banks. According to reports from crypto.news, Cipollone raised these concerns during speeches on February 6 and May 28, linking increased stablecoin use with a possible decline in customer deposits. He argued that consumers may become less willing to keep money in conventional bank accounts if stablecoins gain wider use, and called for the European Union to speed up the digital euro to protect the role banks play in the financial system. Speaking repeatedly on these concerns, Cipollone warned that "if the use of stablecoins increases in the future, banks will also lose retail deposits," placing deposit flight alongside the fees and transaction data that mobile platforms already siphon from lenders. The warning comes as cash is losing ground to cards and apps, with mobile payments already exceeding one in ten point-of-sale transactions in Ireland, the Netherlands and Finland. When customers pay through these channels, banks absorb higher fees than debit cards carry and often receive no information about the transaction, losing both revenue and the data that underpins lending decisions.
The ECB has announced a significant milestone in its digital euro development with 36 payment service providers selected for a 12-month pilot program scheduled to start in the second half of 2027. As reported by crypto.news, the pilot will test how a retail central bank digital currency could operate across the euro area before any decision on issuance. The program includes banks, fintech firms and payment companies, covering different national markets, distribution models and participant types with a mix of incumbents and newer market entrants. The ECB has indicated that a final decision on issuance could come as early as 2029, with the pilot designed to test technology and governance before any full implementation. Cipollone linked this pilot and the broader digital euro work to market structure concerns, warning that moving transaction processing and customer data to non-bank platforms reduces payments-related income streams and the information banks rely on.
Cipollone's latest warnings center on what he calls "unlimited stablecoin holdings," arguing that if there's no cap on how much value can flow into private stablecoins, the outflow from bank deposits could be rapid and destabilizing. As reported by crypto.news, his core argument is straightforward: if consumers and businesses start parking their euros in USD stablecoins like Tether's USDT or Circle's USDC, those funds leave the European banking system. Banks then have to replace cheap deposit funding with more expensive wholesale funding, which makes lending pricier and harder to come by. The ECB's posture signals a clear regulatory direction: Europe is moving toward bank-issued tokenized deposits over private stablecoins as the preferred form of on-chain value transfer. Companies like Circle have invested heavily in MiCA compliance, but the ECB's rhetoric suggests that even compliant private stablecoins aren't the preferred endgame. The warning extends beyond banking concerns to monetary policy implications, with Cipollone arguing that "if consumers and businesses start parking their euros in USD stablecoins, those funds leave the European banking system," creating challenges that the ECB can't easily offset with rate cuts alone.
The ECB's digital euro project emerges as a potential solution to the deposit drain concerns. According to crypto.news, the digital euro would allow customers to open digital euro accounts at their banks and pay across the euro area in shops, online and person-to-person, with or without an internet connection. ECB analysis published last October found the project poses no risk to banks' liquidity or to financial stability. Holdings would carry no interest, and calibrated limits would cap wallet balances, giving users little reason to move large sums out of the banking system. Cipollone has elsewhere called the digital euro a collective step for Europe built to prevent disintermediation, with the project designed to keep lenders anchored in a fast-changing payments market. The infrastructure picture compounds the pressure, with two-thirds of card payments in the euro area now running on non-European schemes and that share climbing. Thirteen of the bloc's 21 countries lack a national card scheme, and more than half have no domestic e-commerce solution, leaving Europe reliant on rails it does not control. The digital euro would be distributed through existing banks, not directly by the ECB, ensuring continued bank involvement in the digital payment ecosystem.
The regulatory landscape compounds the pressure, with ECB President Christine Lagarde questioning whether euro stablecoins carry financial-stability risks, noting that EU rules already push at least 30% of issuer reserves into bank deposits. A private consortium named Qivalis grouping ING, UniCredit, BNP Paribas, CaixaBank and BBVA is preparing a MiCA-compliant euro stablecoin backed one-to-one, with at least 40% of reserves in bank deposits. The European Parliament backed its negotiating position last week with almost 70% of the vote, with trilogue talks opened on Monday and a first issuance potentially following in 2029 if legislation clears by year-end. Under MiCA, which has been in effect since 2023, euro stablecoin issuers must maintain at least 30% of their reserves in bank deposits, with the threshold rising to 60% for issuers deemed significant. However, MiCA creates its own complications, as requiring stablecoin issuers to hold large reserve percentages in bank deposits could create contagion channels, with sudden withdrawals from specific banks potentially triggering localized liquidity stress. MiCA governs euro-denominated stablecoins issued in Europe, but the biggest stablecoins by market cap are dollar-denominated and issued outside the EU, which is precisely why the ECB sees the digital euro as a more structural solution.
Oppenheimer has lowered Coinbase's price target to $209, citing weak trading volumes on the exchange, while maintaining a revised target above current market price. According to crypto.news, Mizuho analysts have warned that the new OpenUSD stablecoin could take market share from Circle, adding another risk to CRCL's stock price. Both companies face potential revenue impacts from changes to US market rules affecting stablecoin revenue and institutional services. The ECB's digital euro project represents a strategic response to Europe's growing reliance on non-European payment infrastructure, with the project designed to maintain the banking sector's central role in the evolving digital payments landscape. The ECB is also advancing two complementary infrastructure projects: "Pontes" focuses on settling transactions involving tokenized assets using central bank money, with a launch expected in Q3 2026, while "Appia" is broader, aiming to create a public-private ecosystem for tokenized finance. These milestones will shape which tokens, protocols, and platforms have a future in European markets, with legislation for the digital euro projected for 2026 and pilot transactions anticipated by mid-2027.
