Fabio Panetta's Insights on the Future of Digital Currency and the Role of Stablecoins

The global financial system is undergoing a major transformation. Fabio Panetta, Governor of Banca d’Italia (Italy’s Central Bank), has recently made a series of statements about the future development of digital currencies and their impact on global payment infrastructure. These views not only reflect European thinking but also shape policymakers’ approaches worldwide regarding digital assets.

Digital Currency Is an Inevitable Trend

In a speech before the executive committee of the Italian Banking Association, Fabio Panetta affirmed that both commercial bank money and central bank money will undergo complete digitization. This is not a prediction of the distant future but a long-term structural development trend driven by major financial institutions and central banks around the world.

Panetta emphasized that digital currencies issued by banks will continue to serve as the primary foundation for the monetary system. This clearly contrasts with the rise of private crypto assets, such as tokens issued independently outside the traditional financial system. European policymakers are well aware that blockchain technology and digital payment solutions will be regulated by official authorities, not by individual crypto projects.

The Practical Role of Stablecoins in the Financial System

Although stablecoins are increasingly attracting attention, Panetta clearly does not see them as a core element of the future financial system. Instead, he pointed out that stablecoins will only play a supplementary, ancillary role within the broader digital payment landscape.

The fundamental reason is that the stability of these tokens depends entirely on their peg to traditional currencies like the euro or the dollar. This dependence significantly limits the independent operation of stablecoins. In other words, these so-called stable tokens are still under the control of traditional fiat currencies, and thus cannot transcend the current monetary framework.

Payments as a Strategic Battlefield

Fabio Panetta identified payment services as a key competitive area in the technological era. He argued that as technology and politics increasingly reshape the global economy, controlling payment flows becomes a crucial political and economic power factor.

According to Panetta, traditional economic variables such as investment, trade, and interest rates are no longer primarily governed by market forces alone. Instead, political decisions are playing an increasingly decisive role. The center of gravity of the global economy is also being profoundly influenced by technological advances. This shift is occurring in a less cooperative global environment compared to previous industrial revolutions, creating a fragmented geopolitical landscape.

Strict Regulations: The Key to Protect the European Union

In September 2025, Chiara Scotti, Deputy Director of the Bank of Italy, expressed specific concerns about stablecoins issued across multiple legal jurisdictions. These are tokens issued under a single brand but operating in different countries, creating legal, operational, and financial stability challenges for the entire European Union.

Scotti warned that unclear legal regulations could weaken the EU’s supervisory frameworks. She advocated for a more restrictive approach: such stablecoins should only be allowed to operate in jurisdictions with regulatory standards comparable to each other, and they must be subject to strict reserve and redemption procedures.

However, Scotti also acknowledged that stablecoins have the potential to reduce transaction costs and improve the efficiency of payment systems. The question is how to harness this potential while ensuring financial safety and system stability.

The common view among European central bank leaders is that stability and consumer protection must be prioritized when deploying new financial technologies. Digital currency is not a decentralized revolution but a controlled evolution of the current financial system under the supervision of government agencies.