Future of Digital Money in an Industrial Revolution Context: Perspective of the Bank of Italy

The transformation of the global monetary system is in full swing, driven not only by technological innovations but also by constantly evolving geopolitical factors. Just as previous industrial revolutions shaped the world economy, the current shift to fully digital money represents a strategic inflection point for financial institutions and central banks. The Bank of Italy, through its top executives, has articulated a clear vision of how this transformation will unfold in the coming years, setting priorities that go far beyond conventional discussions about digital currencies.

Digital Monetary System: Fabio Panetta’s Strategic Vision Beyond Stablecoins

Fabio Panetta, governor of the Bank of Italy, shared a comprehensive outlook on the future of the monetary system in mid-2025 during a meeting with Italian banking associations. His core message was unequivocal: both commercial bank money and central bank-issued money are heading toward full digitization, but stablecoins will remain in a secondary position within this financial architecture. This hierarchy reflects a deliberate strategy by European policymakers, who consistently position digitization as a long-term structural evolution driven by public institutions and established banks, not by privately issued crypto assets.

Panetta emphasized that the stability of stablecoins ultimately depends on their linkage to traditional currencies, making them dependent rather than independent instruments. This observation is crucial to understanding European regulatory logic: while official digital money maintains autonomy and monetary sovereignty, stablecoins function as complements that inherit their credibility from external references. This asymmetry of power within the financial system highlights how central banks intend to preserve their control over the money supply even in the face of blockchain technology’s rise.

Traditional Currencies and Stablecoins: Distinct Roles in Payment Infrastructure

Payment infrastructure emerges as a critical arena of competition between traditional financial institutions and new players in the crypto ecosystem. Panetta identified payments as a strategic field where technology and policy decisions intertwine to shape the global economy. Unlike previous eras, when purely competitive market forces dominated economic dynamics, contemporary variables—such as investment, trade, and interest rates—are increasingly influenced by political and geopolitical directions.

Digitized traditional currencies will remain the backbone of the monetary system, while stablecoins will provide complementary functionalities for specific use cases. This division of responsibilities reflects not only a technological preference but a conscious choice to maintain regulatory power. Recognizing that the global economy is experiencing unprecedented transformations driven by technological advances does not diminish central banks’ commitment to ensuring that the industrial revolutions of the 21st century remain under their scrutiny and direction.

Supervisory Risks and Transnational Barriers: Chiara Scotti’s Assessment

In September 2025, Chiara Scotti, vice director of the Bank of Italy, raised the debate to a more concrete level by addressing the specific risks associated with multi-issuance stablecoins. These structures, characterized by tokens issued simultaneously across multiple jurisdictions under a single brand, present unique regulatory challenges. Scotti warned that such arrangements could generate significant exposures in legal, operational, and financial stability domains for the entire European Union.

Her recommendation was clear: restrict these stablecoins to jurisdictions with equivalent regulatory standards and subject them to strict reserve and redemption mandates. The fundamental concern is that cross-border issuance could circumvent EU supervisory frameworks, creating gray zones where regulatory responsibility becomes ambiguous. Despite this cautious stance, Scotti pragmatically acknowledged that stablecoins have genuine potential to reduce transaction costs and improve payment system efficiency.

Geopolitics and Technology: The New Pillars of Financial Transformation

The joint analysis of Panetta and Scotti’s positions reveals a cohesive European strategy in facing the challenges of the new global financial landscape. The current environment is significantly less cooperative than the context that characterized historical industrial revolutions, when international governance structures were still forming. Today, geopolitical fragmentation is intensifying as technology advances exponentially, creating tensions that traditional financial institutions must navigate with precision.

Banks face a landscape where technological decisions become geopolitical decisions, and vice versa. The digitization of money is not merely a technical exercise but an existential challenge that defines who will control the monetary infrastructure in a multipolar world. By positioning itself strategically in this scenario, the Bank of Italy establishes that Europe will not relinquish its monetary sovereignty to the decentralized and disintermediated forces of the crypto ecosystem, maintaining a clear vision that public institutions will remain guardians of the global financial system.