ECB: Growth of stablecoins could weaken lending in eurozone

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Growth of stablecoins could weaken lending

Impact on the interest rate transmission mechanism

The authors of the report emphasize that stablecoins may disrupt the channels of monetary policy transmission. As deposits flow out, banks’ responses to changes in key interest rates become less predictable. If funding costs rise, banks may restrict lending even when rates are cut.

The ECB notes the non-linear nature of the impact—at low levels of adoption, the effect is limited, but at large-scale usage, consequences intensify. The document states that the growth of digital currencies could reduce lending to the real economy. As a result, financial system stability becomes more sensitive to the structure of digital assets.

Dollar-backed tokens increase pressure

Particular concern centers on the dominance of dollar-pegged stablecoins. According to CoinGecko, dollar-linked tokens account for about 97% of the market, with capitalization of approximately $301 billion. The total stablecoin market exceeds $312 billion and could reach $2 trillion by 2028, according to forecasts.

If most transactions in the eurozone are conducted through dollar-denominated digital assets, this could weaken the euro’s role in cross-border payments. The ECB has previously warned about risks to monetary sovereignty. The growth of the dollar in digital form may increase the region’s currency dependence.

Market scale and potential consequences

Over the past three years, stablecoin market capitalization has more than doubled, reflecting their growing role in payments and digital asset trading. For eurozone banks, even a partial outflow of deposits could mean an increase in funding costs by dozens of basis points. In a slowing economy, this could intensify credit tightening.

If the share of stablecoins in payments continues to grow, the ECB may accelerate the development of a digital euro as an alternative. Current dynamics show that digital assets are becoming a factor already considered in monetary policy decisions. The question is no longer whether stablecoins will affect banks, but rather the scale of that impact.

Recently we wrote that BTC is trading around $67,883, gaining 2.62% over the past 24 hours and 7.34% over the week, with total crypto market capitalization at $2.33 trillion (+1.72% in 24 hours). Bitcoin’s own market capitalization stands at approximately $1.35 trillion, confirming its dominant position in the sector.

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