A senior Bank of Italy official has cautioned that stablecoins issued by multiple entities across different countries could pose significant risks to the European Union’s financial system unless they are restricted to jurisdictions with comparable regulatory standards.
Speaking at the Economics of Payments Conference in Rome on Thursday, Chiara Scotti, vice director of the Bank of Italy, noted that multi-issuance stablecoins—digital tokens issued in several countries under a single brand—can boost liquidity but carry “considerable legal, operational, liquidity and financial stability risks” if even one issuer operates outside the EU.
“While this structure may enhance global liquidity and scalability, it presents significant legal, operational, liquidity, and financial stability risks at the EU level, especially if at least one issuer is located outside the European Union,” Scotti said.
Scotti recommended that multi-issuance stablecoins be confined to jurisdictions with equivalent regulatory frameworks, that redemption be guaranteed at par value, and that cross-border crisis management protocols be implemented.
Stablecoins recognized as promising tools
Scotti also emphasized that the effectiveness of multi-issuance stablecoins depends on robust cross-border cooperation among supervisory authorities, including consistent monitoring and verification of reserve adequacy. She acknowledged that stablecoins can be “promising tools for reducing transaction costs, improving efficiency, and enabling 24/7 availability,” but stressed that only stablecoins pegged to a single fiat currency are suitable as reliable payment instruments.
“It is worth noting that while various types of crypto products are used as a means of payment, only stablecoins pegged to a single fiat currency are suitable for this function, also because they offer a high level of customer protection through the right to redemption at their nominal value.“
Italy takes firm stance on stablecoins
Italian regulators are increasingly raising concerns about the growing use of stablecoins. The country’s financial markets authority, Commissione Nazionale per le Società e la Borsa (CONSOB), joined counterparts in France and Austria in calling for oversight of crypto firms to be transferred to the Paris-based European Securities and Markets Authority (ESMA).
In late May, Fabio Panetta, Governor of the Bank of Italy and former European Central Bank official, suggested that a euro-based central bank digital currency (CBDC) would be a more effective tool to address risks linked to growing cryptocurrency adoption than directly regulating cryptocurrencies. This followed an April report by the Bank of Italy that highlighted stablecoins and non-financial firms’ crypto exposure as key areas of concern.
The report warned of potential risks if dollar-pegged stablecoins became systemic, noting that disruptions in these tokens—or the US government bonds underpinning them—could have “repercussions for other parts of the global financial system.” In the same month, Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, cautioned that US stablecoin policies could pose a threat to the euro’s dominance.
