The Transformative Role of Digitalization in the European Monetary System

The digital transformation of payment methods represents one of the pillars of the European monetary strategy for the coming years. According to recent statements by authorities of the Italian Central Bank, both bank-issued currency and central bank digital currency will converge into fully digital formats, fundamentally redefining the contemporary monetary system.

Digitalization Strategy: Bank Currencies and Their Evolution

During a recent speech before the executive committee of the Italian banking association, Fabio Panetta, governor of Banca d’Italia, emphasized that digitalization is a long-term structural trend within the European economy. From his perspective, both digital money from commercial institutions and that issued by central banks will remain solid foundations of the monetary system.

The view presented by Panetta contrasts with alternative proposals for payment systems. He pointed out that these traditional digital currencies will continue to anchor the entire financial architecture, while other forms of digital assets will play merely complementary roles.

Stablecoins and Their Limited Role in the Monetary Architecture

The so-called stablecoins occupy a subordinate position within this digital reorganization of financial markets. According to Italian authorities, these private digital currencies fundamentally depend on their link to traditional fiat currencies, which naturally limits their capacity for independent operation.

This structural dependence makes stablecoins unsuitable to serve as the foundation of a robust monetary system. To operate with some stability, they require continuous anchoring in conventional currencies, a characteristic that confines them to secondary roles in modern financial infrastructure.

Payment Infrastructure in the Context of Geopolitical Uncertainty

European policymakers identify digital payments as a critical strategic field. Technological transformations and changes in global political priorities create an environment where traditional economic decisions are increasingly influenced by geopolitical considerations, at the expense of purely market mechanisms.

Panetta observed that the global economic axis is shifting under the influence of technological advances, in a much less cooperative context compared to previous industrial revolutions. Financial institutions face significant pressures as they operate in an increasingly fragmented and competitive geopolitical landscape.

Regulatory Supervision and Financial Stability Protection

Complementing this strategic analysis, the Vice Director of the Bank of Italy, Chiara Scotti, presented in September 2025 specific concerns about stablecoins issued across multiple jurisdictions under a single brand. This cross-border model, according to her assessment, poses substantial risks of legal, operational, and systemic stability nature for the European financial system itself.

Scotti advocated for imposing strict restrictions, limiting these stablecoins to jurisdictions with equivalent regulatory standards and subjecting them to strict mandates for reserve maintenance and redemption mechanisms. Cross-border issuance, in her view, could compromise the supervisory frameworks established by the European Union.

Despite these robust concerns, Scotti recognized the potential of stablecoins to reduce transaction costs and enhance operational efficiency of payments, provided they are properly supervised within the European monetary system.

Future Perspectives for the Digital Monetary Architecture

The convergence between Panetta’s and Scotti’s positions highlights a coherent strategy by European monetary authorities. Digitalization is an inevitable path for the evolution of the monetary system, but under strict supervision and preserving the prominence of traditional institutions.

The current debate transcends mere technological issues, reflecting fundamental concerns with monetary sovereignty, financial stability, and the capacity to respond to geopolitical challenges. The careful shaping of the digital payment infrastructure emerges as a strategic priority for central banks seeking to maintain a resilient monetary system under proper institutional control.