Stablecoin adoption poses a risk to traditional bank deposits and could undermine the role of commercial banks in the payment system, according to Piero Cipollone, a member of the European Central Bank’s Executive Board. Speaking on the topic of digital currencies, Cipollone argued that the rise of stablecoins threatens to fragment the financial system unless central banks take action.
Cipollone said that stablecoins, which are typically backed by fiat currency reserves and operate on blockchain networks, offer users an alternative to holding money in traditional bank accounts. If significant volumes of deposits migrate to stablecoin platforms, banks could face reduced funding bases and increased costs, he argued.
However, the ECB official pointed to the digital euro as a solution that would keep commercial banks at the center of the payment system while offering the benefits of digital currency. The digital euro, currently in development, would be a central bank digital currency (CBDC) issued by the ECB and accessible to all euro area citizens and businesses.
“A digital euro would preserve the role of banks as intermediaries while ensuring that citizens have access to a safe, public money option in digital form,” Cipollone said. He contrasted this with stablecoins, which he described as private money that could introduce new risks to financial stability if not properly regulated.
The comments come as the European Union implements its Markets in Crypto-Assets (MiCA) regulation, which sets out licensing requirements for stablecoin issuers. MiCA already imposes reserve and disclosure requirements on stablecoin operators, but Cipollone’s remarks suggest the ECB sees longer-term structural risks that regulation alone may not fully address.
The stablecoin market has grown substantially in 2026, with Tether’s USDT and Circle’s USDC maintaining dominance while newer entrants like Open USD (OUSD) have gained traction through consortium models involving major payment companies.
This article was adapted from Cointelegraph. Read the original here.
