ECB Warns Stablecoins Threaten European Bank Deposits

The European Central Bank has warned banks again: stablecoin growth could drain part of their deposits. The statement came from ECB Executive Board member Piero Cipollone on July 17, 2026, in Rome. At the same time, the stablecoin market has crossed $300 billion, and almost all of it is dollar-denominated.

Cipollone spoke to representatives of Italy's cooperative credit banks. Two-thirds of card payments in the eurozone already route through non-European payment systems, he said, and 13 of 21 eurozone countries have no national card scheme of their own. That dependency is exactly what the ECB uses to argue for a digital euro.

Three Waves of Pressure on Banks

Cipollone's core point is simple. Digital payments are reshaping banking faster than banks can adapt, and they are doing it in consecutive waves. First, mobile payment apps took a cut of the fees and the transaction data. Then fintech companies like PayPal and Stripe arrived with their own services, which still rely on the banking system but capture part of the customer relationship.

When a customer pays through a mobile app, the bank earns a higher fee than on a regular card and often gets no data about the payment at all. The next wave, Cipollone said, will hurt more. If stablecoins become a mass savings and payment tool, banks will start losing fees and the actual resource they use to extend credit.

"If the use of stablecoins increases in the future, banks will also lose retail deposits."

- Piero Cipollone, ECB Executive Board member, from a speech to Italy's Federation of Cooperative Credit Banks, Rome, July 17, 2026

Why Deposits Matter More Than Fees

Losing fees cuts into a bank's profit, and that hurts, but it is manageable. Deposits matter more. They are the raw material banks use to fund loans to businesses and mortgages to homebuyers. The less money sits in accounts, the less a bank can lend to other customers. When people hold savings in stablecoins instead of checking accounts, a bank's lending capacity drops directly.

The mechanism is straightforward. A bank does not keep every deposit sitting in an account. It lends out most of it and keeps a required reserve for itself. When customers move money into stablecoins en masse, the bank has to find funding for new loans from other, pricier sources, which raises borrowing costs for ordinary customers.

For Italy's small cooperative banks, the risk is sharper than for large networks. Half of their branches serve towns with fewer than 10,000 people, where alternative financial services barely exist. With thin margins and a narrow customer base, losing deposits turns from an accounting problem into a survival issue for those banks. That is likely why Cipollone chose cooperative lenders, not the biggest systemic banks, as his audience.

Stablecoins by the Numbers

Global stablecoin market capitalization has climbed close to $300 billion, according to DefiLlama data. These are privately issued tokens pegged one to one to a fiat currency, and the dollar-based USDT holds the largest share of that market. Such a token lets holders store and move money entirely outside the banking system, through nothing more than a phone app.

MiCA, the EU regulation governing crypto assets, has for the past year split stablecoins into approved tokens and ones that still operate in a gray zone through local partners. Circle, for instance, secured e-money token issuer status in the EU last year, which is why its USDC can legally be offered to European customers. According to Cointelegraph, OKX in Europe already lets users convert USDT into MiCA-compliant USDC. That move shows market participants adjusting to the new rules on their own, without waiting for a regulator to force the issue.

A Digital Euro That Pays No Interest

On July 14, the ECB picked 36 banks, fintechs, and payment providers for a 12-month digital euro pilot, including Deutsche Bank, UniCredit, and Revolut. Testing is set to start in the second half of 2027 and will show how a retail central bank digital currency could work across the eurozone. No final issuance decision exists yet. The ECB has said one could come as early as 2029.

Under the regulator's design, the digital euro will pay no interest, and holding limits will cap how much a user can keep in an account. That is deliberate, meant to stop money from flowing out of banks into the digital euro the same way it might flow into stablecoins. The ECB's own financial stability analysis found the design poses no material risk to bank liquidity, though critics are not fully convinced.

A week earlier, the International Monetary Fund warned of similar risks, though its concern centered on capital flight from national currencies in developing economies rather than deposits inside Europe's developed banking system. Both institutions agree on one point: private dollar stablecoins are growing faster than regulators can respond to them.

Risks and Scenarios for Banks

• A shrinking deposit base will make it harder for banks to issue business loans and mortgages.
• Small cooperative banks in smaller towns face a bigger hit than large national networks.
• Digital euro delay. Issuance is not expected before 2029, while stablecoins are growing right now.
• Rising use of dollar stablecoins deepens Europe's dependence on payment infrastructure outside the eurozone.
• The stablecoin market has mostly ignored the ECB's earlier warnings, so this one may not slow growth either.

Critics of the ECB's stance note that the regulator has voiced similar warnings before, and the stablecoin market barely reacted to them. Still, the legislative machinery has actually started moving this time. The European Parliament vote opened the door to formal negotiations, and that is what separates this moment from Cipollone's earlier remarks.

Not Every Bank Is Waiting on the ECB

While the regulator looks to the digital euro for protection, payment networks are taking a different route. A day before Cipollone's speech, Visa unveiled a separate platform letting banks and fintechs integrate stablecoin payments and treasury operations into Visa's own infrastructure. It is part of the broader Open USD project, which several major players, including Coinbase and BlackRock, are building as an alternative to Tether's dominance of the dollar stablecoin market.

For banks, that is a different answer to the same challenge. Rather than waiting for a digital euro that may not arrive until 2027 through 2029, some financial institutions have decided to become part of the stablecoin infrastructure themselves instead of its casualty. Whether that route beats the ECB's own project will become clear over the next few years.

European Banks Are Bracing for a Long Fight

Cipollone's warning should not be read as panic. It is more a signal about the pace of change. Banks lost fee income gradually, over years, and had time to adapt. Losing deposits to stablecoins could happen faster if user adoption accelerates the way the stablecoin market itself has grown in recent years. In that scenario, pressure on banks and regulators will build well before the digital euro moves past its pilot stage in 2027.

We at Kurslog track this market every day. Dollar stablecoins like USDT remain the most popular tool for exchanging into cash and bank cards among our users. So any ECB decision on the digital euro will shape how fast this shift keeps unfolding in the years ahead.