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Former European Central Bank (ECB) representative and Governor of the Bank of Italy, Fabio Panetta, has praised the digital euro as a pivotal instrument for managing the dangers linked to the increasing acceptance of cryptocurrencies.
The Bank of Italy, on May 30, published an annual report containing the governor’s final observations on the economic situation. Panetta stated that the European Union must advance with the central bank digital currency (CBDC) initiative to ensure financial stability and satisfy the need for secure digital transactions.
“It would be a mistake to assume that the development of crypto-assets can only be managed through regulations and restrictions,” Panetta remarked, cautioning that merely regulating cryptocurrencies cannot mitigate the systemic hazards posed by them, and that the digital euro would be essential for addressing these issues.
MiCA’s limited effect on EU stablecoins
Panetta also commented on the influence of the EU’s cryptocurrency regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), which became fully effective in late 2024.
“Since MiCAR was implemented, only a few EMT [electronic money token] stablecoins have been launched in the EU, and their presence remains limited at this time,” the governor indicated.
He further noted that MiCA has not sparked any notable stablecoin advancements in Italy:
“In Italy, there has been minimal interest in the issuance of crypto-assets by regulated intermediaries and other entities, whereas a rising attention on custodial and trading services has been observed.”
MiCA has prompted businesses to inform if they intend to initiate crypto asset services or seek permission to do so, he added.
Risks arising from foreign platforms
While providing some level of protection to European investors, MiCA has not completely shielded savers from the dangers tied to “variability in regulatory practices” worldwide, Panetta contended.
“EU citizens may face the repercussions of failures from platforms or issuers located in other regions that lack adequate regulations or necessary transparency and operational safeguards,” he stated.
He called for enhanced international collaboration and encouraged the EU to spearhead the establishment of global regulatory norms.
Digital euro is ultimately the appropriate solution
Panetta maintained that only a digital euro, supported by the central bank, could provide the necessary confidence and utility in a transforming payment environment:
“What is essential is a response that aligns with the ongoing technological evolution, one that can fulfill the demand for secure, efficient, and accessible digital payment methods, all while maintaining the significance of central bank money,” he expressed. “The digital euro initiative arises precisely from this necessity.”
Panetta’s comments resonate with the agenda advocated by ECB executive board member Piero Cipollone, who has championed the introduction of a digital euro, citing the surging interest in US dollar stablecoins, which currently constitute 97% of the entire stablecoin market.
Related: Why Tether refuses to comply with MiCA
Formerly a member of the ECB’s executive board, Panetta stepped down in October 2023, with his role subsequently taken over by Cipollone.
Panetta’s remarks emerged weeks after Tether, the issuer of the largest US dollar-pegged stablecoin, USDt (USDT), justified its choice to bypass MiCA registration for USDT in early May.
“MiCA licensing is extremely hazardous concerning stablecoins, and I believe it poses even greater risks for the small and medium banking sector in Europe,” Tether CEO Paolo Ardoino mentioned at that time.
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