Former European Central Financial institution (ECB) official and Governor of the Financial institution of Italy, Fabio Panetta, has touted the digital euro as a key software for controlling the dangers round rising cryptocurrency adoption.
The Financial institution of Italy, on Might 30, released an annual report with the governor’s concluding remarks on the state of the economic system. Panetta stated the European Union should transfer ahead with the central bank digital currency (CBDC) undertaking to keep up monetary stability and meet demand for safe digital funds.
“We’d be remiss to assume that the evolution of crypto-assets might be managed solely by guidelines and restrictions,” Panetta stated, warning that crypto regulation alone can’t handle the systemic dangers posed by crypto, and that the digital euro could be key to addressing them.
MiCA’s restricted affect on EU stablecoins
Panetta additionally addressed the affect of the EU’s crypto regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), which entered into full force in late 2024.
“Since MiCAR got here into drive, just some EMT [electronic money token] stablecoins have been issued within the EU and their circulation is restricted to date,” the governor acknowledged.
He additionally stated MiCA has not fueled any important stablecoin developments in Italy:
“In Italy, there has to date been little curiosity within the issuance of crypto-assets by supervised intermediaries and different operators, whereas a rising concentrate on custodial and buying and selling companies has been noticed.”
MiCA has inspired companies to report in the event that they plan to launch crypto asset companies or intend to use for authorization to take action, he added.
Dangers stemming from international platforms
Whereas providing some safety to European traders, MiCA has not absolutely safeguarded savers from the dangers related to “heterogeneity in regulatory approaches” globally, Panetta argued.
“EU residents is likely to be uncovered to failures of platforms or issuers primarily based in different jurisdictions that lack ample controls or the required transparency and operational safeguards,” he stated.
He known as for stronger worldwide cooperation and urged the EU to guide on establishing world regulatory requirements.
Digital euro is in the end the suitable software
Panetta argued that solely a digital euro, backed by the central financial institution, might supply the required belief and performance in a altering cost panorama:
“What is required is a response that matches the continuing technological transformation, one able to assembly the demand for safe, environment friendly, and accessible digital cost devices, all whereas preserving the function of central financial institution cash,” he stated. “The digital euro undertaking stems exactly from this want.”
Panetta’s remarks echo the agenda promoted by ECB govt board member Piero Cipollone, who has advocated for the launch of a digital euro, citing the rising reputation of US greenback stablecoins, which now make up 97% of the entire stablecoin market.
Associated: Why Tether refuses to comply with MiCA
Beforehand a member of the ECB’s govt board, Panetta resigned in October 2023, along with his place subsequently stuffed by Cipollone.
Panetta’s report got here 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 in early Might.
“MiCA license could be very harmful in relation to stablecoins, and I consider that’s much more harmful for the small, medium banking system in Europe,” Tether CEO Paolo Ardoino stated on the time.
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