European Central Bank: Growth of stablecoins will weaken banks' lending capacity and the effectiveness of monetary policy transmission

MarsBitNews · 2026-03-03T13:14:27+00:00

The latest research from the European Central Bank shows that the growth of stablecoins is drawing away bank deposits, weakening the impact of monetary policy on lending, and causing banks to rely more on costlier market financing. The extent of stablecoins' impact depends on their size, design, and regulatory approach, especially as foreign currency-pegged stablecoins may further weaken this link.

MarsBitNews

2026-03-03 13:14:27

Abstract generation in progress

According to Mars Finance, a recent working paper released by the European Central Bank on Tuesday shows that the growth in stablecoin usage is drawing funds away from bank deposits, weakening the transmission of monetary policy to loans. The study indicates that rising interest in stablecoins is associated with a significant decline in retail bank deposits and a reduction in corporate loans. When deposits decrease, banks may be forced to rely more on wholesale or market financing, which is usually more costly and less stable. The European Central Bank notes that the extent to which stablecoins interfere with the transmission channels of monetary policy depends on their scale of adoption, design features, and regulatory approach. In particular, stablecoins denominated in foreign currencies may further weaken the link between domestic monetary policy and bank loans.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.