Former European Central Bank (ECB) and Governor of the Bank of Italy, Fabio Panetta, has tapped the digital euro as a major tool for controlling the risks around the growing cryptocurrency adoption.
The Bank of Italy, on May 30, released An annual report with the Governor’s conclusion of statements in the state of the economy. Panetta said the European Union should move forward with Central Bank Digital Currency (CBDC) projects to maintain financial stability and meet demand for safe digital payments.
“We will forget that the evolution of crypto-assets can be controlled only by policies and restrictions,” said Panetta, who warned that only crypto regulation could not meet the systematic risks that crypto gain, and that the digital euro would be the key to responding to them.
The limited impact of MICA on EU stablecoins
Panetta also discussed the impact of the EU regulation framework, the Crypto-Assets regulation markets (MICA), where enter into full force In the latter 2024.
“Since Micar has begun, only a few EMT (electronic money token) stablecoins have been issued to the EU and their circulation has been limited to date,” the governor said.
He also said Mica did not fetch any significant stablecoin development in Italy:
“In Italy, nowadays there is little interest in the release of crypto-assets through administered mediators and other operators, while a growing focus on custodial and trading services has been observed.”
MICA encourages businesses to surprise if they plan to launch crypto asset services or intention to apply for permission to do so, he added.
Dangers derived from foreign platforms
While offering some protection to European investors, MICA does not fully protect savers from the risks associated with “heterogeneity in regulatory techniques” worldwide, Panetta argued.
“EU citizens can be exposed to failures of platforms or providers based on other constituents without sufficient controls or the required transparency and operational care,” he said.
He called for a stronger international cooperation and encouraged the EU to lead the establishment of global regulatory standards.
Digital Euro will eventually the correct tool
Panetta argued that only a digital euro, supported by the Central Bank, could offer the necessary confidence and operation to a change of payment landscape:
“What is required is a response that corresponds to the ongoing technology change, a capable of addressing demand for safe, efficient, and accessible digital payment instruments, while maintaining a central bank’s money role,” he said. “The digital euro project comes precisely from this need.”
Panetta’s statements are taxing the agenda that ECB Executive Board member Piero Cipollone, who has promotes for launching a digital eurociting the growing popularity of US dollar stablecoins, which Now make up 97% of the whole stablecoin Market.
Related: Why did Tether refuse to follow Mica
Previously a member of the ECB Executive Board, Panetta resigned in October 2023, with her position subsequently filled with Cipollone.
Panetta’s report came Sunday after Tether, the largest US dollar pegged stablecoin, USDT (USDT) defended its decision to skip MICA registration for the USDT in early May.
“Mica’s license is dangerous when it comes to stablecoins, and I believe it’s more dangerous for the small, medium banking system in Europe,” Tether CEO Paolo Ardoino said at that time.
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