Overview
- ECB executive board member Piero Cipollone warned Friday that growing stablecoin use could strip retail deposits from European banks and raise borrowing costs for households and firms.
- The ECB proposes a digital euro that pays no interest and has individual holding caps to reduce incentives to move large sums out of bank accounts.
- Lawmakers and the ECB aim to finish the legal framework by the end of 2026, start pilots in mid‑2027, and target possible issuance around 2029, with Pontes set to begin DLT settlement testing in Q3 2026.
- Technical work includes Pontes for settling tokenized assets and Appia for a public‑private tokenization ecosystem, and the ECB has signed interoperability deals to let merchants accept the digital euro through existing payment standards.
- MiCA already forces euro stablecoin issuers to keep large reserves in bank deposits, which limits some risk but could create contagion if reserve withdrawals hit specific banks and further motivates the ECB’s push.