Introduction
Fabio Panetta, the former Governor of the Bank of Italy and past European Central Bank (ECB) official, has underscored the importance of the digital euro as a vital measure in mitigating the risks associated with the increasing acceptance of cryptocurrencies. Following the release of the Bank of Italy’s annual report, Panetta emphasized the necessity for the European Union (EU) to advance its central bank digital currency (CBDC) initiative, which is essential for maintaining both financial stability and the demand for secure digital transactions.
The Rise of Cryptocurrencies
Reflecting on the rise of crypto-assets, Panetta cautioned that merely imposing regulations will not effectively manage the potential threats posed by cryptocurrencies.
“We would be remiss to think that the evolution of crypto-assets can be controlled only through rules and restrictions,”
he remarked, affirming that a digital euro would play a crucial role in tackling these systemic risks.
Regulation and EU Initiatives
Panetta also touched on the impact of the EU’s Markets in Crypto-Assets Regulation (MiCA), which began fully functioning at the end of 2024. He noted that the regulation has had a limited effect, with only a handful of electronic money token (EMT) stablecoins launched within the EU, and minimal developments observed in Italy regarding crypto-assets. He pointed out,
“In Italy, there has so far been little interest in the issuance of crypto-assets by supervised intermediaries and other operators, while a growing focus on custodial and trading services has been observed,”
highlighting the reluctance of businesses to engage with crypto regulations.
Global Regulations and Investor Protection
Furthermore, he raised concerns about the various regulatory landscapes that overseas platforms operate within, suggesting that while MiCA offers certain protections for European investors, it does not completely shield them from global risks.
“EU citizens might be exposed to failures of platforms or issuers based in other jurisdictions that lack adequate controls or the necessary transparency and operational safeguards,”
he stated, advocating for the EU to take a leading role in forging robust international regulatory standards for cryptocurrency.
Concluding Remarks
In his closing remarks, Panetta reiterated that the digital euro, supported by the ECB, is essential in fostering the necessary trust and adaptability in the rapidly evolving payments ecosystem. He stated,
“What is needed is a response that matches the ongoing technological transformation, one capable of meeting the demand for secure, efficient, and accessible digital payment instruments, all while preserving the role of central bank money. The digital euro project stems precisely from this need.”
His statements resonate with the views of ECB’s Piero Cipollone, who has similarly pushed for the introduction of a digital euro, especially in light of the dominance of US dollar-pegged stablecoins, which constitute 97% of the stablecoin market. Panetta’s report and insights followed Tether’s recent announcement that it would not pursue MiCA registration for its USDt stablecoin. Tether’s CEO, Paolo Ardoino, raised concerns about the potential risks posed by such registration to Europe’s small and medium banking sector, emphasizing the ongoing debate around the regulation of cryptocurrencies in the EU.
