ECB study warns stablecoins could shrink bank deposits and alter monetary policy transmission
A new European Central Bank (ECB) working paper warns that widespread adoption of stablecoins could significantly reduce bank deposits, constrain lending, and complicate the transmission of monetary policy in the euro area. The study identifies a "deposit substitution effect," where stablecoins compete with retail bank deposits, potentially forcing banks to rely more on volatile wholesale funding. This shift could weaken banks' lending capacity and make monetary policy less predictable, especially if U.S. dollar-denominated stablecoins gain traction, indirectly exposing the euro area to foreign monetary shocks. While current impacts are limited due to stablecoins' niche use in crypto trading, the paper cautions that large-scale adoption could structurally alter the traditional banking system.
ambcrypto03/03 17:57
