Europe’s monetary system is moving toward a fully digital era, but without abandoning its traditional foundations.
That was the core message shared by Fabio Panetta, who outlined how central bank money, commercial bank money, stablecoins and tokenised assets are likely to coexist in the years ahead.
Key Takeaways
Europe is heading toward fully digital money, but central bank and commercial bank money will remain the system’s backbone.
Stablecoins are expected to grow, especially with U.S. support, yet they are unlikely to replace traditional money.
The digital euro is seen as a strategic tool to reduce Europe’s dependence on foreign payment providers and protect monetary sovereignty.
Digital money without dismantling the system
Panetta made it clear that digitisation does not mean a breakdown of the two-tier monetary system. Instead, he sees central bank money and commercial bank money continuing to anchor financial stability, even as they shift into digital and tokenised forms. The rise of blockchain-based assets and new payment technologies, in his view, represents a change in format rather than a change in fundamentals.
Stablecoins will grow, but not take over
While stablecoins are expanding quickly, Panetta played down fears that they could replace traditional money. He acknowledged strong political support for stablecoins in the United States, where they are seen as a tool to reinforce global demand for the dollar. Still, he argued that stablecoins lack the institutional role needed to serve as the core of the monetary system, which remains firmly centred on central banks and regulated commercial banks.
Why Europe is pushing for a digital euro
A major theme of Panetta’s remarks was Europe’s growing dependence on foreign payment providers. Today, a large share of digital payments relies on U.S.-based firms such as Visa, Mastercard and PayPal. Against a backdrop of geopolitical tension, he warned that this reliance poses strategic risks.
To address this, the European Central Bank plans to introduce a digital euro by 2029. The goal is to keep central bank money relevant in a digital economy and to safeguard Europe’s monetary sovereignty, not to replace private banks or disrupt existing business models.
Commercial banks and tokenisation
Panetta also expects commercial bank money to evolve. As payments and financial assets become increasingly digital, bank deposits and other instruments are likely to be tokenised as well. This would allow banks to remain central players in the system while operating on modern, digital infrastructure alongside central bank money.
He dismissed fears that a digital euro would marginalise banks, arguing that focusing on potential losses ignores a more pressing issue: much of Europe’s payments activity is already controlled by non-European firms.
