ECB board member warns stablecoins threaten bank deposits and proposes digital euro as structural solution.
DeFi & Yields ·
An ECB board member warned that stablecoin adoption could drain retail deposits from European banks, compounding losses already incurred through mobile payment platforms and card transaction fees. The concern centers on stablecoins functioning as dollar-denominated alternatives to bank accounts that operate outside the traditional banking system, threatening the deposit base banks rely on for lending. In response, the ECB has selected 36 payment service providers for a digital euro pilot beginning in the second half of 2027, positioning a government-issued digital currency as a structural solution to preserve bank deposits within the regulated system.