Commercial banks and central banks will remain the backbone of the monetary system as money becomes fully digital, while stablecoins will play only a supporting role, according to Fabio Panetta, governor of the Bank of Italy.

Speaking on Wednesday to the executive committee of Italy’s banking association, Panetta outlined how digitalization is reshaping money, payments and financial infrastructure. His remarks, reported by Reuters, reflected a broader European policy view that the future of money will be led by regulated institutions rather than privately issued crypto assets.

Digital bank money set to dominate future payments

Panetta said commercial bank money is likely to become entirely digital over time, operating alongside central bank money. Together, these two forms of money will continue to anchor the monetary system, ensuring stability and trust as payments increasingly move online.

Stablecoins, by contrast, can only serve a complementary function, Panetta argued. He noted that their value ultimately depends on a peg to traditional fiat currencies. Because of this reliance, stablecoins cannot function as an independent foundation for the financial system.

His comments reinforced the view that while new forms of digital money may improve efficiency, the core of the system must remain rooted in institutions that are subject to public oversight and regulation.

Limits of stablecoins in the monetary system

Panetta stressed that the perceived stability of stablecoins is not inherent. It comes from their link to sovereign currencies issued by central banks. If that link weakens, the stability of the tokens themselves is at risk.

This dependence, he said, limits the role stablecoins can play in supporting economic activity at scale. While they may be useful for specific payment use cases or niche markets, they cannot replace bank money as the primary store of value or unit of account.

The remarks align with the cautious tone taken by many European policymakers, who have consistently warned against overestimating the role of privately issued digital assets in the future of money.

Payments become strategic amid geopolitical shifts

Beyond digital currencies, Panetta framed payments as a strategic battleground for banks. He said payment systems are no longer just a technical function but a core area of competition as technology and politics reshape the global economy.

According to Italy’s ANSA news agency, Panetta observed that traditional economic drivers such as investment, trade and interest rates are increasingly influenced by political decisions, not just market forces. In this environment, control over payment infrastructure has taken on greater importance.

He also pointed to a shift in the global economic balance, with technological power becoming a key driver of influence. Unlike previous industrial transformations, he said, the current wave of technological change is unfolding in a more fragmented and less cooperative global setting.

Digital finance under pressure from global fragmentation

Panetta described digital finance as a pressure point for banks operating across borders. As geopolitical tensions rise and regulatory approaches diverge, banks face growing challenges in maintaining seamless and secure payment services.

He suggested that resilience, interoperability and trust will be critical as financial systems adapt to this new reality. For European banks, this means investing in digital capabilities while staying aligned with regulatory frameworks designed to safeguard stability.

The comments also echoed broader European concerns about reducing dependence on foreign payment networks and ensuring that domestic and regional systems remain robust.

Italy’s cautious view on stablecoins

The Bank of Italy’s position on stablecoins has been consistently cautious. In September 2025, Vice Director Chiara Scotti warned that so-called multi-issuance stablecoins could pose serious legal, operational and financial stability risks for the European Union.

These tokens, which are issued across multiple jurisdictions under a single brand, could weaken regulatory oversight if not properly controlled. Scotti said such stablecoins should be limited to jurisdictions with equivalent regulatory standards and subject to strict rules on reserves and redemption.

She also acknowledged that stablecoins can reduce transaction costs and improve payment efficiency. However, she cautioned that these benefits must be weighed against the risks they pose to financial stability and regulatory control.

Panetta’s latest remarks build on this stance, reinforcing the message that innovation in digital finance should develop within a framework led by banks and central institutions.