Financial institution of Italy Governor Fabio Panetta informed the nation’s banking affiliation on Wednesday that business banks should convert their cash into digital tokens to stay aggressive as stablecoins acquire momentum, backed by what he described as sturdy assist from america administration.
In keeping with Reuters, the European Central Financial institution policymaker’s feedback come as European officers debate protect the continent’s financial sovereignty whereas American policymakers speed up efforts to ascertain dollar-backed digital property as a worldwide cost customary.
Addressing bankers in Milan, Panetta stated conventional cash would proceed to anchor the monetary system, however warned that each central financial institution and business financial institution cash should change into totally digital.
“I count on business financial institution cash will even change into principally tokenised,” he acknowledged, referring to the method of changing monetary property into digital tokens issued on distributed ledgers corresponding to blockchain.
U.S. Push Drives Stablecoin Enlargement
Panetta acknowledged that stablecoin use would develop considerably consistent with Washington’s strategic priorities.
“They’ll positively develop as a result of there’s an enormous push by the U.S. administration,” he stated, explaining that American officers view digital property as instruments to strengthen world greenback demand.
The governor emphasised uncertainty round stablecoins’ final function however insisted they might not displace conventional cash, which he referred to as the monetary system’s solely steady anchor.
“It’s not clear what function they’ll have … however I count on the system will stay centred round central financial institution and business financial institution cash, each of which might want to change into digital,” Panetta added throughout his tackle to Italy’s banking leaders.
His warning arrives amid escalating European issues about dollar-denominated stablecoins controlling 99.58% of the $300 billion world market whereas euro-backed alternate options stay marginal at simply $680 million.
The ECB has repeatedly flagged systemic dangers from speedy stablecoin development, notably as main issuers now rank among the many world’s largest U.S. Treasury holders, creating potential spillover results into conventional markets throughout stress occasions.
The ECB seeks to launch a digital euro by 2029 to keep up the relevance of central financial institution cash in an more and more digital economic system and to guard Europe’s financial sovereignty.
Panetta famous latest geopolitical developments confirmed Europe’s dangerous dependence on American corporations like Visa, Mastercard, and PayPal for over two-thirds of its funds.
Banks Resisted Digital Euro Over Competitors Fears
The digital euro mission has confronted sturdy opposition from business banks, notably in Germany, which worry competitors from the ECB for deposits.
Panetta addressed this resistance immediately, recounting discussions with banks in a big European nation that opposed the mission as a result of they fearful about shedding 30% of the funds they dealt with digitally.
“Once I mentioned this with the banks of a giant European nation that opposed the digital euro as a result of they fearful they’d lose the 30% of funds they dealt with digitally, I informed them: as a substitute of worrying in regards to the 30% take into consideration who controls the 70% you’ve already misplaced,” Panetta stated.
His remarks distinction sharply with a December open letter from 70 European economists who urged EU lawmakers to prioritize public digital forex over non-public stablecoins, warning that poor design selections might go away Europe depending on international cost methods.
Seventy European economists warn that weak digital euro design might go away Europe reliant on US cost methods and dollar-backed stablecoins.#DigitalEuro #EU #Stablecoinhttps://t.co/FqcWLtAyEG
— Cryptonews.com (@cryptonews) January 12, 2026
The lecturers, together with Thomas Piketty and Paul De Grauwe, demanded that the digital euro function “the spine of a sovereign, resilient European cost infrastructure,” with beneficiant holding limits and broad accessibility.
In the meantime, ten main European banks, together with BNP Paribas, ING, and UniCredit, shaped a consortium in December to launch a euro-backed stablecoin by mid-2026 by a Dutch entity referred to as Qivalis.
The initiative immediately addresses issues about greenback dominance, with euro-denominated stablecoins accounting for lower than 1% of the worldwide market regardless of the eurozone’s financial scale.
Panetta’s tokenization name displays rising recognition that conventional banks threat irrelevance if they don’t adapt to blockchain-based cost methods.
The ECB confirmed final month it could start permitting distributed ledger expertise transactions to settle in central financial institution cash in 2026, marking concrete progress towards integrating digital property into Europe’s financial infrastructure whereas political negotiations proceed over the digital euro’s closing regulatory framework.
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