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Deposits from stablecoin issuers can impact bank capital, liquidity ratios, ECB says

( July 25, 2024, 15:02 GMT | Official Statement) -- MLex Summary: Deposits from stablecoin issuers can affect banks' liquidity and capital ratios and impact their risk profile, according to a paper on dynamics between stablecoin issuers and credit institutions released by the European Central Bank today. The paper found that collecting deposits from stablecoin issuers transforms retail deposits that can serve as a stable source of bank funding into volatile deposits that cannot. It also noted that when a credit institution either collects deposits from stablecoin users and treats them as unsecured wholesale funding, or issues its own stablecoins but cannot identify the stablecoin holders, it weakens its liquidity coverage ratio.The paper is attached....

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