ECB Warns Stablecoins May Drain Bank Deposits, Proposes Digital Euro as Solution

European Central Bank executive board member Piero Cipollone warned at a banking conference in Rome that the rise of stablecoins could drain retail bank deposits, compounding losses from mobile payments that already cost banks fees and transaction data. He noted that mobile payments now exceed one in ten point-of-sale transactions in several EU countries. Stablecoins, privately issued crypto tokens pegged to fiat currency, allow users to hold and move money outside the banking system, threatening the deposit base banks rely on for lending. The global stablecoin market is approximately $300 billion. Cipollone proposed the digital euro as a structural fix, a government-issued electronic cash distributed through commercial banks. The ECB has named 36 payment providers for a 12-month pilot starting in the second half of 2027. The digital euro will pay no interest and have holding limits to prevent deposit outflows. Legislative negotiations began in July 2026, with a target deal by end of 2026 and first issuance eyed for 2029.