The digital euro is proposed as a solution to cryptocurrency risks in Europe.
AI Summary
According to Cointelegraph, Fabio Panetta, former official of the European Central Bank and Governor of the Bank of Italy, emphasized the importance of the digital euro in managing risks associated with the growing adoption of cryptocurrencies. In his closing remarks on the state of the economy, presented in the Bank of Italy's annual report published on May 30, Panetta stressed the need for the European Union to promote the central bank digital currency (CBDC) project to ensure financial stability and meet the demand for secure digital payments.
Panetta warned that reliance solely on regulation to control the evolution of crypto assets should be avoided, arguing that rules and restrictions alone cannot mitigate the systemic risks posed by cryptocurrencies. He argued that the digital euro will be crucial in addressing these challenges. Additionally, Panetta discussed the impact of the EU's regulatory framework for cryptocurrencies, the Markets in Crypto-Assets Regulation (MiCA), which became fully effective at the end of 2024. He noted that since the implementation of MiCA in the EU, only a few electronic money tokens (EMT) with limited circulation have been issued. There has been extremely little interest in issuing crypto assets by regulated intermediaries in Italy, although there is growing attention to custody and trading services.
Panetta noted that MiCA encourages businesses to report their intentions to launch crypto asset services or apply for authorization. However, he expressed concerns about risks arising from foreign platforms, arguing that MiCA has not fully protected European investors from dangers associated with varying regulatory approaches worldwide. He warned that EU citizens could be vulnerable to failures of platforms or issuers based in jurisdictions lacking adequate controls, transparency, and operational assurances. Panetta called for strengthening international cooperation and urged the EU to become a leader in establishing global regulatory standards.
Ultimately, Panetta argued that a central bank-backed digital euro is the right tool to ensure the necessary trust and functionality in a rapidly growing payment environment. He emphasized the need for a response that aligns with technological transformation, capable of meeting the demand for secure, efficient, and accessible digital payment tools while maintaining the role of central bank money. Panetta's remarks align with the agenda promoted by ECB Executive Board member Piero Cipollone, who advocates for the launch of the digital euro, citing the growing popularity of dollar-pegged stablecoins, which currently make up 97% of the stablecoin market. Panetta resigned from the ECB Executive Board in October 2023, and Cipollone became his successor. His report followed Tether's decision to skip MiCA registration for its dollar-pegged stablecoin, USDT, in early May, with Tether's CEO Paolo Ardoino expressing concerns about the impact of MiCA on stablecoins and the European banking system.
