Finance
ECB's Panetta says banks will need to issue fully digital private money
Published by Global Banking & Finance Review®
Posted on January 21, 2026
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 21, 2026
3 min readLast updated: January 21, 2026
ECB's Panetta envisions a future where commercial bank money is fully digital, complementing central bank currency. Stablecoins will remain secondary, pegged to traditional currency.
By Valentina Za and Antonella Cinelli
MILAN, Jan 21 (Reuters) - Commercial bank money is set to become fully digital in the future, like central bank money, and the two will continue to anchor the monetary system, a top European Central Bank policymaker said on Wednesday.
The growing use of financial assets in digital, or tokenised, form has raised questions about the future of the two-tier monetary system that links central bank and private money. Some experts warn that stablecoins could undermine the principle that all forms of money trade at par and are interchangeable regardless of issuer.
Addressing Italy's banking association, Bank of Italy Governor Fabio Panetta said it was difficult to predict how stablecoin use would evolve but insisted they would not displace traditional money, which he described as the financial system's only stable anchor.
Stablecoins are typically referenced to a conventional financial asset, mostly the U.S. dollar, to maintain a stable value.
"They'll definitely develop because there's a big push by the U.S. administration," Panetta said, adding Washington encouraged digital assets to support dollar demand.
"It's not clear what role they'll have ... but I expect the system will remain centred around central bank and commercial bank money, both of which will need to become digital."
To ensure central bank money remains relevant in an increasingly digital economy and to protect Europe's monetary sovereignty, the ECB aims to launch a digital euro in 2029.
"I expect commercial bank money will also become mostly tokenised," Panetta said.
Tokenisation refers to converting financial assets into digital tokens issued on a distributed ledger such as blockchain.
The digital euro project has faced resistance from banks, particularly in Germany, which fear competition from the ECB.
Panetta said recent geopolitical developments showed it may be risky for Europe to rely on U.S. firms such as Visa, Mastercard and PayPal for more than two-thirds of its payments.
As an ECB executive board member before becoming central bank governor, Panetta led the digital euro project.
"When I discussed this with the banks of a large European country that opposed the digital euro because they worried they'd lose the 30% of payments they handled digitally, I told them: instead of worrying about the 30% think about who controls the 70% you've already lost," he said.
(Reporting by Valentina Za and Antonella Cinelli. Editing by Cristina Carlevaro and Mark Potter)
Digital bank money refers to currency that is created and managed by commercial banks in a digital format, allowing for electronic transactions and transfers without the need for physical cash.
Tokenisation is the process of converting rights to an asset into a digital token on a blockchain, allowing for easier transfer, ownership tracking, and enhanced security in transactions.
Central banks are national financial institutions responsible for managing a country's currency, money supply, and interest rates, aiming to ensure economic stability and control inflation.
Commercial bank money is the money created by commercial banks through lending activities, which exists in digital form and is used for transactions within the banking system.
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