Italy's Central Bank Chief Backs Digital Cash, Not Stablecoins

Fabio Panetta, the governor of Italy's central bank, predicts a future where commercial bank money becomes fully digital, operating alongside digital central bank currency.

In a recent address to Italy's banking association, Panetta outlined a vision where both digital commercial and central bank money remain the bedrock of the monetary system. He stated that stablecoins, by contrast, are destined to play a merely complementary role.

According to Panetta, the inherent weakness of stablecoins is their reliance on a peg to traditional currencies, which limits their ability to function as an independent pillar of the financial system. His comments underscore a prevailing view among European policymakers: the digitalization of finance should be a structural trend led by established banks and central institutions, not by privately issued crypto assets.

Payments: The New Geopolitical Battleground

Panetta emphasized that payments have evolved into a strategic arena for banks, describing the sector as a core competitive battleground in a global economy being reshaped by technology and politics.

He argued that traditional economic indicators like investment, trade, and interest rates are increasingly swayed by political decisions rather than pure market dynamics. In this new landscape, the global economy's center of gravity is shifting toward technological power.

However, Panetta noted that this tech-driven transformation is unfolding in a far less cooperative global environment than previous industrial revolutions. For banks, this positions digital finance as a major pressure point in an increasingly fragmented geopolitical world.

The Bank of Italy's Cautious Stance on Stablecoins

Panetta's remarks align with the Bank of Italy's consistently cautious approach toward stablecoins and other forms of privately issued digital money.

This institutional skepticism was previously articulated on September 19, 2025, when the bank's Vice Director, Chiara Scotti, warned about the risks associated with multi-issuance stablecoins—tokens issued across multiple jurisdictions under a single brand. Scotti identified several potential threats to the European Union, including:

• Significant legal risks

• Operational vulnerabilities

• Risks to financial stability

To mitigate these dangers, Scotti proposed that such stablecoins should be restricted to jurisdictions with equivalent regulatory standards. She also called for strict mandates on reserves and redemption processes, citing concerns that cross-border issuance could undermine the EU's oversight frameworks.

Despite these warnings, Scotti acknowledged that stablecoins could offer benefits, such as lowering transaction costs and improving the efficiency of payments.