Deep Tide TechFlow News, on March 3rd, according to Cointelegraph, the latest 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.

Research 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 typically more expensive and less stable. The European Central Bank pointed out that the extent to which stablecoins interfere with the transmission channels of monetary policy depends on their scale, design features, and regulatory approach. In particular, stablecoins denominated in foreign currencies may further weaken the link between domestic monetary policy and bank loans.