ECB Official: Stablecoins Threaten Bank Deposits; Digital Euro to Be Long-Term Solution

According to ECB Executive Board member Piero Cipollone on July 18, stablecoins could undermine retail deposits at European banks, the core funding source, and subsequently impact lending capacity. The global stablecoin market reached approximately $300 billion, with the vast majority pegged to the U.S. dollar.

To address the challenge, the ECB is advancing the digital euro plan. The central bank selected 36 payment service providers for pilot testing, scheduled to begin in the second half of 2027 for 12 months. The European Parliament approved digital euro legislation negotiations in early July, with a goal to reach consensus by end-2026 and formal issuance targeted for 2029 at the earliest.