BlockBeats News, July 18th - Piero Cipollone, a member of the Executive Board of the European Central Bank (ECB), stated that with the popularization of stablecoins, European commercial banks may face the risk of retail deposit outflows in the future. He mentioned that a digital euro would be a long-term solution to address this challenge.

Cipollone pointed out that mobile payments have already caused banks to lose some fee income and transaction data. The further development of stablecoins could weaken the primary source of funding for banks - retail deposits - and subsequently affect their lending capacity. He noted that the current global stablecoin market is roughly $300 billion, with the vast majority pegged to the US dollar.

To tackle these challenges, the European Central Bank is advancing the digital euro project. According to the design, commercial banks will be responsible for account management of the digital euro. The digital euro will have non-interest-bearing characteristics and hold limits to reduce the risk of large-scale fund outflows from the banking system. The ECB has selected 36 payment service providers to participate in the digital euro pilot project, scheduled to launch in the second half of 2027 for a period of 12 months.

Furthermore, the European Parliament approved the initiation of legislative negotiations on the digital euro in early July. The aim is to reach an agreement on the relevant bill by the end of 2026, with the digital euro expected to be officially issued as early as 2029.