ECB's Cipollone cites retail deposit loss in latest rejection of euro stablecoins

At a gathering of Italian cooperative bankers on Friday, July 17, European Central Bank (ECB) board member Piero Cipollone reiterated a long-held anti-stablecoin sentiment position at Europe’s apex bank.

This time, Cipollone’s argument against allowing euro stablecoins to circulate freely across the Old Continent was that such a scenario would thin out the retail deposits that flow into traditional banks. The fix, according to him, is already in the digital euro that the bank plans to launch.

Cipollone’s Rome comments would have been popular with his audience of Italy’s Federation of Cooperative Credit Banks, whose lending business depends disproportionately on deposits, even more than large commercial banks.

Why is the ECB against euro stablecoins?

The ECB has expressed different positions for its opposition to euro stablecoins. Board member Cipollone argued that the recently popular modes of digital payments have already impacted banks’ businesses in terms of losing payment fees and customer transaction data. 

Add stablecoins to the mix, and the slope becomes steeper.

Cipollone proposed the ECB’s digital euro CBDC as the solution for his audience. “The digital euro would both preserve the role of public money and ensure banks remain involved in the payments ecosystem while continuing to meet their customers’ needs,” Cipollone said.

The issue of Europe losing out to payment infrastructure providers not local to the continent is another popular point that Cipollone referred to.

Will the ECB change its stablecoin stance?

Cipollone’s July 17 remarks reiterate the same position the ECB has held for months.

Isabel Schnabel, speaking on June 1 at a Bank of Korea conference in Seoul, said that stablecoins threaten financial stability and monetary sovereignty. The board member compared them to the 1970s scenario where money market funds pulled deposits away from banks, as Cryptopolitan reported.

Digital euro pilot continues

The Friday speech landed three days after the ECB moved its digital euro closer to reality. On Tuesday, the central bank named 36 payment service providers for a 12-month pilot, drawn from more than 50 applicants and spanning banks, fintechs and payment firms from across the euro area.

The list runs from Germany’s Deutsche Bank and Italy’s UniCredit to the neobank Revolut, and the trials will be hosted by the ECB alongside 19 of the region’s 21 national central banks, according to Cryptopolitan. Malta and Bulgaria are the two eurozone members not represented.

Cipollone, who chairs the ECB’s High-Level Task Force on the digital euro, said at the time that strong interest showed the private sector was ready to move. The pilot is set to begin in the second half of 2027 and will test a beta version of the currency that carries no legal tender status.

The politics are moving in parallel. In June, the European Parliament’s Committee on Economic and Monetary Affairs backed the digital euro legislation by 43 votes to 14 with one abstention, part of a package that also guarantees the future of physical cash.

Even so, the ECB has said it does not expect to issue a digital euro before 2029 at the earliest. Banks worried about their deposits, and stablecoin issuers eyeing the euro market, have a few years yet to watch how the fight plays out.

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