ECB warns stablecoins threaten bank deposits as digital euro push intensifies
Piero Cipollone tells Italian lenders that stablecoins risk draining retail deposits, as Coinbase and Circle shares wobble on the remarks.
A senior European Central Bank official has warned that the growth of private stablecoins risks pulling retail deposits away from Europe’s commercial banks, intensifying the case for a digital euro as the bloc’s preferred alternative to dollar-backed tokens. Piero Cipollone, a member of the ECB’s executive board, delivered the warning on Friday 17 July at a gathering of Italy’s cooperative banks in Rome.
Cipollone argued that as stablecoins become more embedded in everyday payments, households and businesses could increasingly hold funds in tokenised form rather than in bank accounts. That shift, he suggested, would detach retail deposits from lenders’ balance sheets, raising funding costs and posing particular strain on smaller institutions that rely heavily on stable retail funding.
Digital euro positioned as the institutional response
The ECB has repeatedly framed a digital euro as the mechanism through which it can preserve the role of public money in an increasingly tokenised financial system, while keeping commercial banks anchored within the payments chain. Cipollone’s Rome remarks reinforced that positioning, casting central bank money, tokenised deposits and regulated payment infrastructure as the preferred foundations for Europe’s digital finance architecture, in contrast to privately issued stablecoins largely dominated by US-based issuers.
For European policymakers, the concern is not merely technical. A large-scale migration of deposits into stablecoins would reduce the pool of funding banks can lend against, potentially raising borrowing costs for households and small businesses across the euro area at a time when the continent’s lenders are already under pressure to compete with faster-moving US institutions.
Market reaction touches Circle and Coinbase
The remarks coincided with softness in shares of two of the largest listed players in the stablecoin and exchange ecosystem. Coinbase slipped 1.75% to $157, while Circle, issuer of the USDC stablecoin, lost around 6% over five trading sessions to trade near $60. Neither move can be attributed solely to Cipollone’s comments, but the timing underscores how sensitive stablecoin-linked equities remain to signals from European regulators about the sector’s long-term footing on the continent.
For UK and European investors, the episode is a reminder that the region’s regulatory stance on stablecoins is far from settled, even as the Markets in Crypto-Assets regime has brought a formal licensing framework into force. The ECB’s preference for central bank-issued digital money over privately issued dollar stablecoins suggests continued friction between Frankfurt’s monetary authorities and issuers seeking a foothold in the eurozone’s payments infrastructure.
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