Fabio Panetta, the Governor of the Bank of Italy and a former European Central Bank (ECB) official, has highlighted the digital euro as a vital instrument for managing the risks associated with the growing adoption of cryptocurrencies. In the Bank of Italy’s annual report released on May 30, Panetta emphasized that the European Union must advance the central bank digital currency (CBDC) project to ensure financial stability and meet the demand for secure digital payments.
Panetta warned that relying solely on regulations and restrictions, such as the Markets in Crypto-Assets Regulation (MiCA), is insufficient to control the systemic risks posed by crypto-assets. He argued that the digital euro would be essential in addressing these risks. MiCA, which came into full force in late 2024, has had limited impact on the issuance and circulation of electronic money token (EMT) stablecoins within the EU. In Italy, there has been little interest in the issuance of crypto-assets by supervised intermediaries, with a growing focus on custodial and trading services instead.
Panetta also noted that MiCA has not fully protected European investors from the risks associated with platforms and issuers based in other jurisdictions that lack adequate controls and transparency. He called for stronger international cooperation and urged the EU to lead in establishing global regulatory standards. Panetta argued that only a digital euro, backed by the central bank, could offer the necessary trust and functionality in a changing payment landscape. He stated that the digital euro project aims to meet the demand for secure, efficient, and accessible digital payment instruments while preserving the role of central bank money.
Panetta’s remarks align with the agenda promoted by ECB executive board member Piero Cipollone, who has advocated for the launch of a digital euro, citing the growing popularity of US dollar stablecoins. Panetta’s report came weeks after Tether, the issuer of the world’s largest US dollar-pegged stablecoin, USDt (USDT), defended its decision to skip MiCA registration for USDT. Tether CEO Paolo Ardoino stated that the MiCA license is dangerous for stablecoins and could be detrimental to the small and medium banking system in Europe.
The Bank of Italy’s emphasis on the digital euro as a key tool for managing crypto risks underscores the importance of central bank digital currencies (CBDCs) in the modern financial landscape. As the world continues to embrace digital technologies, central banks must adapt and innovate to ensure the stability and security of their financial systems. The digital euro represents a significant step in this direction, offering a regulated and trusted digital payment option that can coexist with traditional financial instruments. This move could set a precedent for other regions looking to integrate digital currencies into their financial ecosystems, positioning Europe at the forefront of digital financial innovation.
