Bank of Italy Chief Warns Banks Must Tokenize Money to Compete with Stablecoins

Bank of Italy Governor Fabio Panetta instructed the nation’s banking affiliation on Wednesday that business banks should convert their cash into digital tokens to stay aggressive as stablecoins achieve momentum, backed by what he described as sturdy assist from the United States administration.

According to Reuters, the European Central Bank policymaker’s feedback come as European officers debate how to protect the continent’s financial sovereignty whereas American policymakers speed up efforts to set up dollar-backed digital belongings as a world cost customary.

Addressing bankers in Milan, Panetta mentioned conventional cash would proceed to anchor the monetary system, however warned that each central financial institution and business financial institution cash should grow to be totally digital.

“I anticipate business financial institution cash will even grow to be largely tokenised,” he acknowledged, referring to the method of changing monetary belongings into digital tokens issued on distributed ledgers equivalent to blockchain.

U.S. Push Drives Stablecoin Expansion

Panetta acknowledged that stablecoin use would develop considerably in line with Washington’s strategic priorities.

“They’ll positively develop as a result of there’s a giant push by the U.S. administration,” he mentioned, explaining that American officers view digital belongings as instruments to reinforce international greenback demand.

The governor emphasised uncertainty round stablecoins’ final function however insisted they’d not displace conventional cash, which he referred to as the monetary system’s solely secure anchor.

“It’s not clear what function they’ll have … however I anticipate the system will stay centred round central financial institution and business financial institution cash, each of which is able to want to grow to be digital,” Panetta added throughout his handle to Italy’s banking leaders.

His warning arrives amid escalating European concerns about dollar-denominated stablecoins controlling 99.58% of the $300 billion international market whereas euro-backed alternatives remain marginal at just $680 million.

The ECB has repeatedly flagged systemic dangers from fast 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 preserve the relevance of central financial institution cash in an more and more digital financial system and to defend 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 Competition Fears

The digital euro undertaking has confronted sturdy opposition from business banks, notably in Germany, which worry competitors from the ECB for deposits.

Panetta addressed this resistance straight, recounting discussions with banks in a big European nation that opposed the undertaking as a result of they frightened about shedding 30% of the funds they dealt with digitally.

“When I mentioned this with the banks of a big European nation that opposed the digital euro as a result of they frightened they’d lose the 30% of funds they dealt with digitally, I instructed them: as an alternative of worrying in regards to the 30% take into consideration who controls the 70% you’ve already misplaced,” Panetta mentioned.

His remarks distinction sharply with a December open letter from 70 European economists who urged EU lawmakers to prioritize public digital foreign money over personal stablecoins, warning that poor design decisions may depart Europe depending on international cost methods.

Seventy European economists warn that weak digital euro design may depart Europe reliant on US cost methods and dollar-backed stablecoins.#DigitalEuro #EU #Stablecoinhttps://t.co/FqcWLtAyEG

— Cryptonews.com (@cryptonews) January 12, 2026

The teachers, 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.

Meanwhile, ten major European banks, together with BNP Paribas, ING, and UniCredit, shaped a consortium in December to launch a euro-backed stablecoin by mid-2026 via a Dutch entity referred to as Qivalis.

The initiative straight addresses considerations 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 would begin allowing distributed ledger technology transactions to settle in central financial institution cash in 2026, marking concrete progress towards integrating digital belongings into Europe’s financial infrastructure whereas political negotiations proceed over the digital euro’s closing regulatory framework.

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