Published by Global Banking & Finance Review®
Posted on March 3, 2026
2 min readLast updated: April 2, 2026
Add as preferred source on GoogleAn ECB study warns that growing use of stablecoins—especially dollar‑pegged—could undermine monetary policy, drain bank deposits, and hamper lending, though euro‑area deposits remain far larger and stablecoin volumes still modest.
FRANKFURT, March 3 (Reuters) - The spread of stablecoins in the euro zone could weaken the effectiveness of monetary policy, siphon deposits away from banks and reduce lending to the real economy, a study published by the European Central Bank showed on Tuesday.
Stablecoins, crypto assets designed to maintain a stable value, remain niche but their rapid growth has raised concerns that regulation is not keeping pace with a product that could reshape commercial and central banking.
For traditional lenders, the key issue is that the growing use of stablecoins may lead customers to move money out of bank deposits, forcing lenders to obtain more expensive funding in the market.
"In other words, stablecoins can reduce the amount of credit banks provide to the real economy," the paper, written by ECB economists, said.
However, euro area bank deposits still total about 17 trillion euros ($19.7 trillion) while the global stablecoin market is roughly $300 billion, suggesting that banks are not yet facing any sizable deposit hit.
For the ECB, a key problem is that most stablecoins are issued in dollars, a currency it does not control.
If dollar-based assets gain wider use in Europe, policy moves outside the bloc could affect liquidity and spending conditions, diluting the ECB's influence.
"Foreign monetary conditions could be 'imported' into the euro area through stablecoins," the paper said, adding that that would weaken the central bank's control over financial conditions, among other things, especially during periods of financial stress.
A hit to banks would also weaken the ECB, as the euro zone economy relies on lenders to transmit interest rate changes to the real economy, the economists said, adding that would make the impact of policy moves less predictable.
These risks call for meaningful regulation of stablecoins, such as stronger transparency requirements for stablecoin reserves, robust redemption guarantees, adequate capital buffer to absorb losses and effective oversight can reduce financial risks, it said.
($1 = 0.8627 euros)
(Reporting by Balazs Koranyi; Editing by Nivedita Bhattacharjee)
Stablecoins could weaken ECB's monetary policy by altering liquidity and spending conditions, especially if foreign currencies gain wider use in Europe.
Stablecoins may lead customers to move money from bank deposits, forcing banks to seek more expensive funding and reducing credit to the real economy.
Most stablecoins are issued in dollars, outside ECB's control. Their wide use in Europe could import foreign monetary conditions, diluting ECB's influence.
The ECB suggests stronger transparency for reserves, robust redemption guarantees, adequate capital buffers, and effective oversight to reduce risks.
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