Central Bank Digital Currency (CBDC) Offers Stability Amid Crypto Surge
The Bank of Italy has emphasized the urgent need for a digital euro to manage the increasing risks associated with cryptocurrency adoption. In its latest annual economic report released on May 30, the institution highlighted that regulation alone is not enough to address systemic risks from crypto assets.
The digital euro, a proposed central bank digital currency (CBDC) for the European Union, is viewed as a critical instrument to maintain financial stability and support the public’s demand for secure digital payments.
“We would be remiss to think that the evolution of crypto-assets can be controlled only through rules and restrictions,” stated the central bank.
MiCA’s Limited Impact on Stablecoin Adoption
The Markets in Crypto-Assets Regulation (MiCA), which came into full effect in late 2024, was designed to enhance oversight of digital asset markets across the EU. However, its impact has so far been limited.
According to the report, only a few EMT (electronic money token) stablecoins have been issued since MiCA’s implementation, and their circulation remains low.
“In Italy, there has so far been little interest in the issuance of crypto-assets by supervised intermediaries,” the report noted, though it acknowledged a rise in custodial and trading services.
MiCA has encouraged firms to declare their crypto plans, but this has not translated into significant growth in compliant stablecoins.
Risks from Foreign Crypto Platforms
The Bank of Italy also warned that EU citizens remain vulnerable to risks from unregulated foreign platforms. Despite MiCA offering a regulatory shield within the EU, global inconsistencies in oversight leave gaps.
“Citizens might be exposed to failures of platforms or issuers based in other jurisdictions,” the report cautioned, calling for stronger international regulatory cooperation.
Digital Euro: A Long-Term Solution
The report argues that the digital euro is the only reliable solution to meet the technological transformation of financial systems. It would offer central bank-backed trust, essential for safe, efficient, and accessible digital payments.
“What is needed is a response that matches the ongoing technological transformation,” the report concluded.
The digital euro project aligns with growing concerns over the dominance of non-EU stablecoins, particularly US dollar-pegged tokens, which now represent 97% of the global stablecoin market.