A Senior Bank of Italy official has warned that Stablecoins issued many creatures in different countries are causing significant risks to the European Union’s financial system unless they are strictly limited to constituents with equal regulatory standards.
Speaking At Roman Economics of Payment Conference on Thursday, Chiara Scotti, Vice Director of Bank of Italy, said Multi-issue Stablecoins-digital token issued in some countries under a single brand-could increase liquidity but also bring “large legal, operational, liquidity and risk of financial resilience” EU.
“Although this architecture can enhance global liquidity and scalability, it causes significant legal, operational, liquidity and financial stability risks at the EU level, especially if at least one provides outside the European Union,” Scotti said.
Scotti recommends that multi-issue stablecoins are limited to constituents with equal regulatory criteria, that redemption should ensure par and cross-jurisdictional crisis protocols.
To the EU, Stablecoins are currently falling under the markets in crypto-assets regulation (MICA) framework. This leads to strict reserves, disclosure and management policies; Algorithmic stablecoins are effectively banned. Scotti’s commentary indicates that she is afraid that a multi-issue stablecoin may break the effectiveness of some of those policies.
Stablecoins are recognized as tools that promise
Scotti highlights that the stability of the multi-issue Stablecoin model is “hinge in strong cross-border cooperation with administration authorities, including mechanisms to continue monitoring and verifying enough reserves.”
He acknowledged that Stablecoins were “promising tools for lowering transaction costs, enhancing efficiency and enabling the existence of 24/7. He argued, however, that only stablecoins that were contained in a single Fiat Currency were appropriate as payment instruments.
“It is noteworthy that while different types of crypto products are used as a payment method, only stablecoins are contained in a single Fiat Currency are suitable for this function, as they also offer a high level of customer protection by the right to redeem their nominal value.”
Related: Italy’s gov’t to ramp up the Crypto market tracking
Italy takes stable bearing on stablecoins
Italian regulators have expressed concerns over increasing stablecoins. Italy The financial market regulator, national commission for companies and stock exchanges, has joined regular French and Austria to call for The administration of regulation of crypto companies to be transferred to the authority of European securities and markets based in Paris.
By the end of MayFabio Panetta, a former European Central Bank and Governor of the Bank of Italy, suggested that an euro -based Central Bank Digital Currency is the right tool for addressing the risks associated with increasing cryptocurrency adoption, rather than regulating cryptocurrencies. It was followed by the latter April report by the Bank of Italy singing Stablecoins and crypto exposure of non-financial firms as major concerns.
Related: Bank of Italy to release crypto guidelines on ‘the day coming’ – governor
The report highlighted potential risk if tokens with dollars would be systematic and interruptions to stablecoins or the underlying US government bonds may have “repercussions for other parts of the global financial system.” Also in April, Italy’s economic and financial minister, Giancarlo Giorgetti, warned that US stablecoin policies may threaten euro dominance.
Magazine: Crypto wants to overthrow banks, now they become in the battle of Stablecoin
